Responding to Oracle’s Sunday, October 28 deadline to take or leave its $6.7 billion, $17 per share offer, the BEA board has come back with a counter offer, raising the ante to $8.2 billion, or $21 per share. In a written statement, the board stated that Oracle’s offer “significantly undervalues BEA, and is therefore not in the best interests of BEA shareholders.”

BEA’s fiduciary responsibilities, not to mention intentions of minority investor Carl Icahn, practically obligated it to respond to Oracle.

BEA backed its response by referring by claiming its market leadership in enterprise infrastructure software, a “deep and diverse” customer base counting 75% of the Global 500, and what it termed “an exceptionally strong balance sheet” of over $1 billion in cash and no debt. And it claimed that its $21 valuation was based on its reading of analyst estimates as to the value of previous acquisitions by Oracle and other players in the software industry. 

While BEA claims that Oracle’s bid was lowball, in the weeks following Oracle’s October 12 offer, no other IT player has come forward with competing bids. While BEA’s shares soared from $13.62 to a 52-week high of $18.94 immediately following Oracle’s offer, since then shares have since settled back to the $17.75 range.

Although BEA head Alfred Chuang has long opposed a sale, his position has been weakened by extended delays in financial reporting clearing up past options irregularities, perception that the core business has flattened, and investor pressure to boost shareholder value. Consequently, unlike PeopleSoft, BEA’s board did not unequivocally reject Oracle’s overtures. And with Icahn’s support, the board decided from the outset to hold out for a better offer. So BEA’s counter-offer to Oracle was hardly a surprise.

But given the fact that neither IBM, SAP, nor any other white knight has come forward, pressure has mounted on the board to act. BEA’s counter offer achieves that, raises the ante, and most importantly for BEA’s board, plays for time.

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