Oracle, the US business software company, on Friday made an unsolicited $6.7bn (£3.3bn) bid for BEA Systems, a San Jose-based software maker that has come under pressure from Carl Icahn, the billionaire activist investor.
The deal comes as Oracle is trying to overtake rivals SAP and IBM by pursuing an aggressive acquisitions strategy.
BEA rebuffed the offer, arguing that it “significantly undervalues” the company.
Shares in BEA rose above Oracle’s offer price of $17 a share, indicating investor hopes of an increased bid. On Friday, shares in BEA closed more than 38 per cent higher at $18.82.
Oracle’s $17-a-share offer represented a 25 per cent premium to BEA’s share price at the close of business on Thursday.
“We have made a serious proposal including a substantial premium for BEA,” said Charles Phillips, Oracle president. “We believe our all-cash offer provides the best value for BEA’s shareholders and the best home for BEA’s employees and customers.”
If successful, the deal would represent Oracle’s biggest takeover since its $10.3bn acquisition of PeopleSoft three years ago.
It would also mark the latest in a string of deals in the software sector this year. SAP earlier this week announced plans to buy Business Objects, the Franco-US software company, for $6.7bn.
Shares in Oracle edged 2 cents lower to $22.44 on Friday in New York.
Mr Icahn last month sparked a fresh wave of takeover speculation when he reported that he held more than 8 per cent of BEA shares and called for the company to be sold.
The corporate raider has since increased his stake in the company to 13 per cent. Mr Icahn did not return a request for comment.
Shares in BEA, which makes middleware, or software that connects business functions such as billing and supply chain management to back-office databases, fell more than 30 per cent between October and March. They began to rise again in August after the company reported its second-quarter results.
BEA has been the subject of takeover speculation since the beginning of the technology downturn in 2001.
The company was an early leader in the middleware market but it has struggled to gain momentum in recent years amid strong competition from rivals such as Oracle and SAP, both of which have moved to bolster their middleware offerings.
Charles di Bona, an analyst at Sanford Bernstein, said the deal’s valuation was “financially unattractive” for Oracle at $17 a share. However, Brent Thill, an analyst at Citigroup, said a price of up to $20 a share could still make financial sense for Oracle, assuming big cost cuts at BEA. Mr di Bona said he did not expect a rival bidder to emerge.