The Wall Street Journal-20080117-BEA Systems Trading Is Heavy Ahead of Deal With Oracle
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BEA Systems Trading Is Heavy Ahead of Deal With Oracle
At first blush, it appeared options trading in BEA Systems Inc. ahead of its acquisition by Oracle Corp. marked another leaked deal. But, it seems the trades were innocent.
The business-software companies announced yesterday a merger they valued at $8.5 billion, or $19.375 a share. The deal comes after BEA rebuffed a lower, hostile offer from Oracle last October.
Shares of BEA soared 18.5% to $18.46 yesterday.
During trading Tuesday, about 49,000 call options traded, seven times the volume of puts and about six times the average daily volume this month.
During the days of buyout fever, such an uptick in call activity tended to indicate news of a deal had spread ahead of a public announcement.
Representatives for Oracle and BEA Systems didn't return requests for comment.
However, it appeared many of the trades Tuesday were investors who were closing out January contracts and opening similar positions in later months.
Still, traders who had snapped up call contracts Tuesday could have pocketed big one-day profits. January calls at the $17.50 strike price could be bought for just 5 cents. Yesterday, those contracts cost 95 cents each.
Also, the Securities and Exchange Commission sided with the Chicago Board Options Exchange in an ownership dispute, potentially clearing the way for the exchange to sell shares to the public.
