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Oracle Pushes BEA Systems on Buyout Bid

A Sunday deadline is given for a deal.

Updated from 11:11 a.m. EDT

SAN FRANCISCO -

BEA Systems

rebuffed

Oracle

(ORCL) - Get Report

again late Tuesday.

Oracle had turned up the heat earlier on BEA earlier in the day by urging its board to put Oracle's $17-a-share buyout bid to a shareholder vote, after another rejection of the offer by BEA's board on Monday.

Oracle also gave BEA a deal deadline of Sunday, according to a published letter from Oracle President Charles Phillips to BEA's board.

Oracle

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disclosed the offer Oct. 12.

Bill Klein, vice president of business planning and development for BEA, told Oracle on Monday that the board had again rejected its bid of $17 a share, according to the letter.

In a letter late Tuesday, Klein reiterated that the Oracle board is unanimous in its view that the offer is not good enough for shareholders. "BEA is worth significantly more than $17 to Oracle, to others, and most importantly to BEA shareholders."

Klein suggested Oracle up its offer price, or take its proposal directly to shareholders.

Investors apparently expect an offer price in the range of $18. Shares of BEA closed Tuesday at $17.87, down 72 cents, or 3.9 percent. The stock is trading at 32 times 2008 projected earnings.

Oracle's bid represents a 21% premium over BEA's closing price of $14.05 the day before the offer was made, Phillips wrote. It's also a 44% premium above the stock's price the day before activist investor Carl Icahn disclosed a large stake in BEA.

Icahn,

who holds 13.22% of BEA, has urged the company to hold out for a better offer.

While some sell-side analysts held out hope that another buyer would emerge, that possibility has dimmed as no other offers have been made public.

"Our checks indicate the Oracle sales force is salivating at the possibility of taking

BEA product lines WebLogic and AquaLogic in to their installed base, and we see Oracle as being willing to be aggressive in order to win in any bidding war," wrote SunTrust Robinson Humphrey analyst Terry Tillman on Oct. 15. SunTrust makes a market in BEA.