Jim Cramer predicted a while ago that
, but company denials and a BEA downgrade followed.
But today it was announced that Oracle is indeed buying BEA Systems for $17 a share, a 25% premium.
Cramer's thesis for this particular merger started with
stockpickr.com, where he looks to see what activist investors are buying, Cramer said on TheStreet.com TV's Wall St. Confidential
Web video Friday. "I need people to recognize that there are certain things that must occur legally, and you cannot accept them as being important."
For one, "a company is allowed to say it is not for sale and be for sale," he said. "When you have a publicly traded stock, you are by nature for sale.
"Secondly, when a company like Oracle says that they're destroying the competition, that doesn't mean that the competition is destroyed," Cramer continued. "That just means it's gotten to the point ... that they'll buy it. Oracle has a long tradition of bashing exactly who it's going to buy. Once Chuck Philips bashed BEA Systems on the conference call, you knew that was absolutely terrific."
Finally, when Wall Street downgrades, market players should take the other side, he advised.
Cramer said it's not that he had any particular insight into the deal, but he realizes it's how it's done in corporate America. "You say you're not for sale in order to get a higher price," he explained.
"The company who wants to buy is going to deny wanting to buy you because it doesn't want to pay a higher price," Cramer said. "A company that is falling apart because of Oracle is a candidate to be bought by Oracle."
Oracle and BEA Systems fit those criteria. All Cramer said he did was look at what has happened in the history of Oracle and in the history of mergers and acquisitions and reach conclusions based on that.
"Don't listen to the companies
because legally they're not allowed to help you," he said. "Decide whether you like the company, decide whether there's a catalyst.
"Everyone believes what every company says, but that's just not how it works," Cramer said. It's not that companies are not trying to throw you off course; it's just what they're told to say legally.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for
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