Rebuff of Oracle means BEA faces battle with Icahn
SAN FRANCISCO - After shooing away Oracle’s $6.7 billion takeover bid, business-software maker BEA Systems dug in its heels for a potentially disruptive battle with its largest shareholder, activist investor Carl Icahn.
In a letter sent to Icahn on Monday, BEA’s board reiterated its willingness to sell the San Jose, Calif.-based company for $21 a share - about $1.5 billion more than Oracle offered before retracting the bid late Sunday.
BEA’s board hinted at talks with other suitors, assuring Icahn “we are currently exploring ways to maximize shareholder value, including the possible sale of the company.”
Other possible suitors
Analysts have listed IBM and Hewlett-Packard as the two candidates besides Oracle most likely to try to buy BEA and its line of “middleware” - coding that helps business-software applications interact with databases.
Both IBM and HP have declined to comment on the speculation.
But Monday’s letter didn’t respond to Icahn’s demands that the company hold a public auction, then allow shareholders to decide whether any of the bids should be accepted.
In a Friday letter, Icahn threatened to wield his 13.2 percent stake to lead a shareholder rebellion aimed at ousting BEA’s directors unless the board budges from its $21-a-share asking price. Icahn didn’t immediately respond to a request for comment Monday.
The rebuff of Oracle has driven BEA’s stock down from a recent five-year high of $18.94 reached earlier this month. The shares finished Monday unchanged at $16.50.
By holding its ground, BEA finds itself at odds with two billionaires - Icahn and Oracle Chief Executive Larry Ellison.
Icahn began pushing for a sale last month, shortly after divulging he had accumulated a large stake in the slumping company.
Ellison, who has been on the takeover prowl for three years, pounced on BEA nearly three weeks ago with an offer that represented a 25 percent premium above BEA’s stock price of $13.62 before the bid was revealed.
BEA quickly rejected Oracle’s bid as inadequate, an opinion Icahn initially shared before lashing out at the board last week for not doing more to keep Oracle’s offer on the table.
With BEA refusing to discuss any offer below $21 a share, Oracle retracted its $6.7 billion bid Sunday and warned it might not be back.
Oracle strategy
But many analysts believe Oracle is just biding its time in hopes of bagging BEA as cheaply as possible. Analysts have estimated Oracle could pay $20 to $27 a share and still make money off the deal.
Ellison has argued BEA isn’t worth more than $6.7 billion because its sales have sagged and its books have been muddled by accounting problems caused by the mishandling of employee stock options.
For now, Oracle appears to be encouraging Icahn to try to remove BEA’s directors.
“If the BEA shareholders are unhappy with the behavior of the BEA board, it is up to those shareholders, not Oracle, to take the appropriate action,” Oracle said after ending its bid.