BEA Bidding War Opens

Oracle's bid is largely about acquiring customers and maintenance revenue. BEA has more than 15,000 customers. And while there is considerable customer overlap with BEA already, Oracle intends to sell its own products into BEA's customer base, according to Holt.

Oracle would also be acquiring BEA's engineering talent, Sholler notes. "BEA has had a longstanding reputation for having high quality products and engineers who've built those products." The acquisition would give Oracle access to a large "pool of talent."

Oracle's bid also puts smaller independent middleware suppliers in play, because "someone has just said BEA's worth $6 billion," Sholler says. Suppliers Tibco Software(TIBX - Cramer's Take - Stockpickr), Software AG and Fujitsu's software division are all likely candidates for further consolidation. "They all have middleware components that are competitive with BEA's."

Tibco closed up 13.4% to $8.77. Oracle finished down 2 cents to $22.44.

Oracle and BEA each have 10% to 12% of the worldwide market for middleware, compared with about 30% for IBM, according to Citigroup analyst Brent Thill. Oracle is an investment banking client of Citigroup.

A shortage of qualified engineers has beset Silicon Valley this year, and Oracle has had some of the biggest demand for development staff to keep rolling out products.

"While a BEA deal doesn't help Oracle's organic license growth in the medium term, it does provide the company with a stable and high-growth maintenance revenue stream," Holt wrote.