Oracle (NASDAQ: ORCL) had threatened to walk away from its $17 offer for BEA Systems (NASDAQ: BEAS) and it did. The larger company had set a 5 PM deadline yesterday for a response. "BEA shareholders should not assume that Oracle will renew its $17 per share offer in the future," Oracle said in a statement picked up by Reuters.

Adding to the pressure, BEA shareholder Carl Icahn has threatened a proxy fight if the company is not auctioned off. The company has lost most of its alternatives because no other firm would match the Oracle offer.

It appears that BEA gambled and lost. It must have believed that Oracle would raise it bid to lock in a deal for the company. The BEA board issued a statement saying that the company was worth $21. But no one seemed to buy that. The stock had not traded above $17 for about four years.

BEA is now left with few if any alternatives. Icahn may be able to force a sale of the company, but the only buyer would appear to be Oracle. In the meantime BEA shares are likely to take a sharp fall.

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