In an ever-shrinking business world full of corporate takeovers and buy-outs, Oracle Corporation (NASDAQ:ORCL) had offered a bid to buy BEA Systems, Inc. (NASDAQ:BEA) for $6.7B – at the time about 25% higher than BEA’s share price – but BEA has rejected Oracle’s bid today. Carl Icahn, the activist shareholder who owns 13.2% of BEA, has approved and welcomed any buy-outs.

Carl Icahn has not yet gone on record regarding BEA’s rejection of Oracle’s bid, but today BEA sent a letter to Oracle saying, “It is apparent to our board, however, that BEA is worth substantially more to Oracle, to others and, importantly, to our shareholders than the price indicated in your letter.” Since Oracle announced its buy-out bid, BEA’s stock has jumped almost 40%, which is considerably higher than the 25% premium Oracle had offered over the BEA stock price to buy BEA.

Very interesting dynamics. It’s like your neighbor offering to pay $12,500 for your car worth $10,000, which sounds like a great deal for you, but as soon as your other neighbors got wind of the offer, they suddenly were offering you $13,500 and $14,000 for your car, and it behooves you to reject your first neighbor’s offer. You know something better is out there. BEA is set up perfectly for a bidding war.

The stock market is perhaps one of the ultimate free market systems in the world, where prices are completely dictated by consumers’ perceptions of value. If people perceive your company to be worth a certain amount, your stock price will perfectly reflect that amount. BEA Systems needs to be patient and let the market determine its worth. They were wise to disapprove of the Oracle buy-out. If BEA is indeed interested in selling their company, which it seems they are, they will most likely attract a much higher price than the one Oracle offered. Sorry, Oracle, but at least you got the pricing ball rolling.