NEW YORK, Oct 12 (Reuters) Oracle Corp said on Friday it made a .7 billion unsolicited offer to buy business software maker BEA Systems Inc, which is under pressure from activist shareholder Carl Icahn to put itself up for sale.
Shares in BEA jumped nearly 32 percent in premarket trading to .96, nearly above Oracle's offer price of per share, suggesting investors think a rival bid will emerge.
Analysts have said that International Business Machines Corp, Microsoft Corp, CA Inc and Hewlett-Packard are also potential suitors for BEA, which sells software that helps business computer systems communicate with each other.
Icahn, who first reported an ownership stake in BEA in mid-August, has acquired more than a 13 percent voting stake in BEA, saying its stock is undervalued and that the company would be better off as part of a larger business.
So far BEA Chief Executive Alfred Chuang has rebuffed Icahn's proposal. Company officials have said that BEA doesn't intend to put itself up for sale.
Oracle said it delivered a letter to the board of BEA on Oct. 9, offering per share in cash for the company. The price represents a 25 percent premium over BEA's closing stock price on Thursday.
''This proposal is the culmination of repeated conversations with BEA's management over the last several years,'' said Oracle President Charles Phillips in a statement. ''We look forward to completing a friendly transaction as soon as possible.'' BEA officials were not immediately available for comment.
Oracle said its bid for BEA was aimed at bolstering its line of middleware, or programs that large businesses use to help manage their computer networks.
The deal comes a week after German rival SAP offered 4.8 billion euros (.8 billion) for Business Objects, raising expectations for further consolidation in the software industry.
''I think its a good transaction for both firms. It's not terribly surprising. I think the valuation is fair,'' said Needham&Co. analyst Richard Davis.
''One of the problems BEA had was they would compete with IBM, and IBM would walk in and bundle services, hardware and software ...
they can in effect underprice their total package relative to BEA,'' said Davis.
Oracle has spent the last several years buying up other specialty software makers, in an effort to compete with Microsoft and SAP.
The proposed deal is Oracle's biggest since it bought Siebel Systems for about billion in early 2006. Earlier this year it bought Hyperion Solutions for more than billion.
Cognos Inc, a