The $17-per-share cash offer is a decent premium of 25% over the stock’s Thursday closing price of $13.62, but news of the offer sent BEA’s shares up 38% to $18.82 on Friday.

Investors clearly don’t think Oracle’s offer will be the last, whether from Oracle or another bidder, and BEA’s board said it had already rejected the $17 bid after the markets closed on Friday.

Almost immediately the two companies started fighting over the nature of their talks to date.

BEA is worth substantially more to Oracle, to others and, importantly, to our shareholders, BEA’s board said in a statement.

The possibility of an Oracle takeover bid had been rumored for months, and comes roughly a month after noted investor Carl Icahn said that he had upped his stake in BEA by 2% to 8.5%. As of Friday, his stake had further inflated to 13%.

The offer is Oracle’s largest since digesting PeopleSoft for over $10bn back in 2005. That acquisition took 18 months, several lawsuits and a great deal of accusations and hyperbole before it finally closed for almost double the original offer price in January 2005.

Evidently, investors still believe that BEA is in play. The stock soared within the first hour after the opening bell on Friday. But other potential suitors, such as Hewlett-Packard and SAP, have not yet made any public comment.

Prior to Oracle’s announcement, BEA’s stock price had languished over the last year, dropping from the $16 range a year ago to a low of $10 in August. Over the last 12 months, it had never reached the heights of Oracle’s $17 offer.

The rumors of an acquisition had been sparked by largely stagnant product sales. While for fiscal 2007 as a whole, license sales were up 12%, they were dwarfed by 20% growth in services.

And in the latest quarter, BEA’s second fiscal quarter 2008, reported in August, license revenues actually declined by 9% over the previous year.

The bright spots have been the ESP and BPM portions of the AquaLogic product line. But they have been weighed down by disappointing results for portal products, not to mention flat or declining sales for the company’s original bellwether, WebLogic Server.

But BEA said that the public does not know how well its business is doing. The company has not filed any Securities and Exchange Commission earnings reports since August 2006, due to an internal stock options probe.

We believe that the absence of current financial information in the public markets limits investor visibility into our performance, the company said in its market close statement. We expect that this will be corrected in the near future when we become current on our SEC filings.

Oracle, naturally, disputes this. President Charles Phillips, in a letter to BEA published a few hours after BEA rejected the $17 offer, called BEA’s Thursday closing price of $13.62 already inflated by Icahn publicly increasing his stake two months ago.

Our proposed price is a substantial premium to an already-inflated stock price that reflected speculation of the potential sale of BEA and represents a more than 40% premium to BEA’s stock price before the appearance of activist shareholders in mid-August, he wrote.

The question now is whether BEA and Oracle will enter into a friendly takeover deal, or whether we’re looking at another PeopleSoft — a dirty fight that memorably included threats of dog assassination.

So far, signs are erring toward the hostile.

The two companies are already fighting over how their talks to date have played out, with Oracle trying to make out that BEA forced it to make the unsolicited bid and BEA denying that.

The sequence of events appears to be this:

Oracle and BEA management have been talking for years about a potential acquisition, but a formal offer was not made until last Tuesday, October 9. This offer letter was published on Friday morning before the markets opened.

On Thursday October 11, BEA vice president of business planning and development William Klein wrote to Phillips on behalf of the BEA board, rejecting the offer. This letter was published after market close on Friday.

The two companies appear to agree on those facts.

However, Oracle claims that on Thursday night, after receiving the rejection letter, Phillips and Klein spoke by phone and reached an impasse after Klein declined an offer for the two companies’ managements to meet in person and discuss a friendly takeover.

Unfortunately, BEA canceled the meeting late last night and declined our invitations to reschedule, Phillips said in a statement late Friday.

In my subsequent discussions with Bill [Klein] earlier today, I asked whether there was any process that BEA would prefer to follow to move towards a friendly transaction and was told that BEA had no such process in mind, he added.

Oracle’s implication is clearly that BEA forced Oracle to launch its unsolicited offer, and that it is BEA’s management that is being unreasonably hostile to the bid.

Klein denied Phillips’ accusations in a statement published a few hours later on Friday night.

He said that BEA did not agree to meet on Friday, did not agree to finalize a deal by today, and did not say there was no process by which a friendly takeover was possible

He pointed out that BEA’s assertion that the company is worth more than $17 a share was validated by its rocketing share price Friday.

Our View

Conventional wisdom has it that that BEA has hit a wall, as enterprises are seduced by Oracle’s and IBM’s greater footprint at the high end and JBoss’s incursions at the low end, where it offers a much less expensive alternative to BEA.

But BEA is clearly frustrated that its options investigation has meant a year without detailed SEC filings full of financial data for investors to pore over.

The probe has likely had a depressing effect on BEA’s share price, but Icahn’s recent interest in the company, coupled with acquisition rumors has propped it up.

Oracle points out that its $17 offer is a 40% premium over BEA’s pre-Icahn share price.

While the unsolicited nature of the bid and the already blossoming war of words between the two companies is indeed reminiscent of the PeopleSoft fight — if only in that Oracle frequently sought to characterize PeopleSoft management as overly obstructive and self-interested — there are substantial differences.

Oracle announced its PeopleSoft bid, a low-ball 6% premium, just days after PeopleSoft made its own advances on JD Edwards, a move rightly characterized by PeopleSoft as atrocious behavior from a company with a history of atrocious behavior.

With BEA, Oracle has put forth a reasonable offer, which could not really be described as insulting, and yet Wall Street clearly thinks the company is worth more and that another bidder may be forthcoming.

So it seems unlikely Oracle will get away with a $17 bid, no matter how attractive the initial premium. With that in mind, it’s unlikely the drama will end soon.