Oracle Corp. (NASDAQ: ORCL) will be buying competitor BEA Systems, Inc. (NASDAQ: BEAS) in a deal worth about $7.85 billion, both companies announced early this morning. BEA makes software that connects Oracle's market-leading database software to the vast array of business software applications that millions of workers use daily.

Although there had been some dispute over the value of BEA in recent months, the $8.5 billion deal does give a 24% share premium to Tuesday's closing price of $15.58 for BEA common shares. This morning, however, BEAS is up more than 18% at $18.45 on the takeover news. Activist investor Carl Icahn even blessed the merger by saying he would vote his 13% BEA stake in favor of the combination: "This transaction is an excellent example of the great results that can be achieved for all constituencies when the shareholder activist is able to work cooperatively with management."

Oracle, the world's second largest software maker after Microsoft Corp. (NASDAQ: MSFT), was interested in BEA back in October of last year, but the company rejected its offer of $17 per share (total value: $6.7 billion). The latest offer from Oracle, which is pegged at $19.375 per share, won unanimous approval from BEA's board of directors. Oracle's continuation of billion-dollar acquisitions of late have added some pretty decent heft to its offerings. The company has acquired competitors PeopleSoft, Siebel Systems and Hyperion Solutions -- and now, BEA.

[The author holds a long position in MSFT]