Option update: BEAS options suggest buyout deal in early 2008

BEA Systems (NYSE: BEAS), received a proposal on 10/12/07 from Oracle (NYSE: ORCL) to be acquired for $17 a share in cash. ORCL announced on 10/23, "ORCL has no interest in a long, drawn-out process to acquire BEAS. BEAS said on 10/26, ORCL $17 per share proposal is unacceptable. Carl Icahn, the largest shareholder of BEAS, holding over 58 million BEAS shares and equivalents, said on 10/26 BEAS should allow its shareholders to decide the fate of BEAS by conducting an auction process and BEAS should not agree to dilute voting by issuing stock, entrench management of derail a sale of BEAS. BEAS said today, 10/29, we are not opposed to an acquisition of the company. In fact, we are currently exploring ways to maximize shareholder value, including the possible sale of the company. Smith Barney says, "We continue to think the likelihood of BEAS being acquired remains high, although the process and the timeframe are unclear a point." BEAS call option volume of 33,577 contracts compares to put volume of 8,064 contracts. BEAS December & January option implied volatility of 38 is near its 26-week average of 39 according to Track Data, suggesting non-directional risk.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.