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Oracle Sets Sunday Deadline for BEA Bid

With no other suitors stepping forward, business software maker Oracle Corp. is threatening to abandon its $6.7 billion bid for BEA Systems Inc. unless its smaller rival accepts the offer by Sunday evening.

Oracle set the deadline Tuesday after being notified that BEA's board of directors had rejected its $17-per-share offer for the second time in less than two weeks.

In response, BEA reiterated its position that Redwood City-based Oracle needs to pay more and indicated it remains open to negotiations.

Oracle's ultimatum is designed to turn up heat on San Jose-based BEA, which had already been under shareholder pressure to boost its slumping stock price before Oracle made its unsolicited bid earlier this month.

Billionaire investor Carl Icahn, who owns a 13 percent stake in BEA, is pushing the company's board of directors to secure a higher bid, either through private negotiation or an auction.

Oracle's all-cash offer propelled BEA's shares to a five-year high, reflecting investor hopes that another bidder would enter the fray or Oracle would sweeten the pot.

Industry analysts have listed SAP AG, IBM Corp. and Hewlett-Packard Co. among the candidates mostly likely to try to wrest BEA away from Oracle. All those companies have declined to comment on the speculation.

Although no other bids have emerged, Wall Street still appears convinced that BEA eventually will be sold for a price above Oracle's offer. BEA shares fell 50 cents to $18.09 during Tuesday's late afternoon trading.

"Oracle has all the leverage right now, so they are trying to put the ball in BEA's court," said Pacific Growth Equities analyst Yun Kim.

Although Oracle said it set the Sunday deadline to quickly resolve the fate of its BEA bid, the Redwood Shores-based company can be a relentless predator.

Beginning in mid-2003, Oracle spent 18 months pursuing PeopleSoft Inc. before finally locking up the $11.1 billion acquisition. During that quest, Oracle frequently extended deadlines for PeopleSoft's board to accept various offers.

It remains unclear whether Oracle wants BEA as badly as it wanted PeopleSoft, which ranked among the leading makers of business software applications that automate payroll processing, product management and other administrative tasks.

BEA specializes in a smaller market niche called "middleware" -- computer coding that makes applications run more smoothly on top of databases. Just before its surprise bid for BEA, Oracle had been extolling its own lineup of middleware products.

Oracle already has spent more than $25 billion snapping up its smaller rivals during a three-year shopping spree that has helped boost its profit and market value. The company's shares rose 21 cents to $21.41 during Tuesday's late afternoon trading.

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