BEA Systems plays dangerous game with Oracle's buyout offer

BEA Systems (NASDAQ: BEAS) was able to get Goldman Sachs (NYSE: GS) to suggest that the company is worth $21 a share. The stock has not traded that high in over four years. But Oracle (NASDAQ: ORCL) has made a bid of $17, and the BEAS board wants to see if it can get more.

The plan does not appear to be working out. Oracle said that it would not pay extra money for the smaller company and will simply take its case to shareholders.

Reuters writes that "Oracle said BEA's price represented an 80 percent premium to its shares before activist shareholders started pushing for a sale of the company, and nearly 11 times BEA's revenue from software maintenance services in the last 12 months." If the BEAS shareholders do not push its board to take the offer, Oracle has threatened to move on.

BEA Systems has a problem. The number it has picked for valuing the company is arbitrary. The company's stock price before the Oracle offer does not support it. Shares changed hands in the $13 to $14 range. And no other company has come along to even match Oracle's $17 offer.

The BEAS board may be dooming a buyout and that would probably send shares back to their pre-offer lows. That kind of behavior often brings shareholder lawsuits and trouble that the company's management does not need.

BEA Systems ought to wise up and take the money on the table.

Douglas A. McIntyre is an editor at 247wallst.com.