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S&P: Mixed Opinions on Big Tech Deals

Oracle (ORCL): Maintains 4 STARS (buy)

Analyst: Zaineb Bokhari

The information technology company agreed to acquire Siebel Systems (SEBL) for $10.66 a share, subject to necessary approvals. at a 17% premium to Siebel's recent price. The proposed deal is valued at $5.85 billion ($3.6 billion, net of Siebel's cash and equivalents) and is expected to close in early 2006. We view the planned deal favorably, as we think it will catapult Oracle above its rival SAP (SAP). The price paid seems reasonable to us at about 2.6 times cash and about 4.4 times Siebel's trailing revenue. We will provide additional details following a scheduled conference call this morning.

eBay (EBAY): Reiterates 3 STARS (hold)

Analyst: Scott Kessler

eBay announced a proposed acquisition of Skype Technologies in a deal valued at up to $4.1 billion in cash and stock. eBay believes Skype will enhance its existing businesses by enabling greater and better communications among its current users. It also foresees new Skype offerings. We see such benefits aiding growth, particularly in emerging markets where telecommunications services are more expensive and less accessible. But, given Skype's 2004 revenues of only $7 million, we believe the price is too high. We expect the planned deal to close in the fourth quarter, pending necessary approvals.

Wachovia (WB): Maintains 4 STARS (buy)

Analyst: Mark Hebeka, CFA

Wachovia agreed to purchase California-based Westcorp (WES), and the remaining public shares of Wescorp's majority-owned WFS Financial (WFSI) unit, in an all-stock deal for

about $3.91 billion, pending needed approvals. We see a larger West Coast presence, increased penetration in existing footprint and efficiencies gained by larger scale as positives for Wachovia. We believe the proposed deal should help to combat a difficult interest rate environment and offer a long-term boost to net interest margin. The

planned deal is expected to close in the first quarter of 2006 and to be accretive to earnings in 2007.

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