BEA Bidding War Opens

Updated from 3:33 p.m. EDT

SAN FRANCISCO -- After years of waiting for a BEA Systems(BEAS Quote) acquisition, the Street may finally get one.

But investors don't seem sure the company has found its best offer.

Oracle(ORCL Quote) gave BEA Systems a great big bear hug Friday by going public with background discussions the two companies were having on a possible merger.

But while Oracle's $17-a-share bid finally puts the middleware company in play, a deal is far from wrapped up.

"It is apparent to our Board ... that BEA is worth substantially more to Oracle, to others and, importantly, to our shareholders than the price indicated in your letter," the board stated in a Thursday letter sent to Oracle. BEA made the letter public on Friday after Oracle's offer announcement.

Traders apparently agree, bidding the stock up well beyond Oracle's offer price; the stock closed up nearly 40% to $18.82.

Speculation of a bidding war for San Jose, Calif.-based BEA has been running rampant, with IBM(IBM Quote), Hewlett-Packard(HPQ Quote) and SAP(SAP Quote) viewed as possible rivals.

But obstacles in front each of those companies makes it more likely that Redwood City, Calif.-based Oracle will ultimately prevail.

The idea that HP would bid for BEA would be "a shock," says IDC's HP analyst Stephen Elliott. "The middleware layer hasn't been a focal point for them. Middleware would be out in left field," for the server maker.