Oracle Corporation (NDAQ:ORCL) will have to increase  its offer for BEA Systems (NDAQ:BEAS) by more than 23 percent if it wants to continue negotiations to buy the company. BEA rejected Oracles prior bid of $17 per share made two weeks ago that was set to expire this Sunday. The company, along with its shareholders, are still looking for a sale but at a better price.

BEA believed that Oracle's previous bid significantly undervalues BEA and therefore is not in the best interest of BEA shareholders. The new $21 per share valuation was derived with help from Goldman Sachs and based on analyst estimates of synergies in prior acquisitions by Oracle. The investment banking firm believes that BEA could achieve earnings accretion in a BEA acquisition at levels well in excess of $21 per share.

A valuation of $21 per share would set the company's market cap at $8.15 billion. The company believes it can justify this valuation because it has an exceptionally strong balance sheet with over $1 billion in cash and no debt. Moreover, the business support software industry is booming and Oracle is finding itself under pressure to purchase after SAP acquired Business Objects earlier this month.

In the end, with investors like Carl Icahn pushing for a sale of BEA, it is likely that the company will continue to find ways to unlock value. Whether or not Oracle will negotiate at $21 per share remains to be seen, but this is definitely a stock that is worth watching!

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