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Wed 24 Oct 2007 01:36 PM

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Oracle sets deadline on BEA deal

Battle with BEA continues as both parties refuse to budge on acquisition terms.

Oracle appears to have reached stalemate in its efforts to take over business program maker BEA.

The software giant has set a deadline of Sunday October 28 for BEA to accept its hostile acquisition bid, which values the company at approximately $6.7 billion or $17 per share.

The business program maker, however, is insisting it won't agree to negotiations unless Oracle raises its offer, according to a report by Reuters.

BEA rejected Oracle's original offer made earlier this month saying it "significantly" undervalued the company.

Oracle, however, which is known for its relentless acquisition strategy, is said to be unlikely to shift on its position.

In a letter to BEA's board, Oracle president Charles Phillips said he believed the offer - which was 21% premium to BEA's closing price the day before the proposal - was generous and there would be no other offers above this price.

"Oracle has no interest in a long, drawn-out process to acquire BEA," he said.

Oracle is keen to secure BEA to strengthen its position in the battle with IBM on middle software, which connects servers with databases and programs that manage Internet transactions.

Oracle's offer was expected to spur interest from rivals - namely SAP, HP and IBM - generating a takeover battle, but so far no other deals have to come to the fore.

SAP has said it is not interested, and HP and IBM have declined to comment.

Analysts are now saying the deal with Oracle looks increasingly likely to fall through.

"While a deal is still possible, there is also a chance that it will fall apart altogether," Frederic Ruffy, an analyst at Optionetics told Reuters.

Should the takeover go ahead, it will be Oracle's biggest acquisition since it bought Siebel Systems for approximately $6 billion in January last year.

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