Oracle Corporation's (NDAQ:ORCL) bid for
BEA Systems Inc.
(NDAQ:BEAS) expired on Sunday after the two companies couldn't come to
an agreement on a fair buyout price. BEA Systems said it believed its
shares were worth $21 each while Oracle called that multiple
unreasonable. Many shareholders, like Carl Icahn, believe that
shareholders should be the ones deciding - not the company.
After
letting the offer expire on Sunday, Oracle said in a statement that,
"Over the last 20 days the BEA board has repeatedly rejected our offer
and refused to meet with us, even though we offered to meet without any
preconditions. We asked the BEA board to allow their shareholders to
vote on our $17 per share proposal. They chose not to. 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."
Icahn did just this via a letter
submitted to BEA Systems' board of directors. The billionaire activist
noted in the letter that BEA's public declaration of a $21 per share
"take it or leave it" price was a management entrenchment tactic, not a
negotiating tactic. According to Icahn, "If a topping bid arises, then
all the better. But if no topping bid arises it should be up to the BEA
shareholders to decide whether to take the Oracle bid or remain as an
independent company."
Subsequently, Carl Icahn demanded
that BEA should allow its shareholders to decide the fate of the
company by conducting an auction sale process and allowing shareholders
to accept or reject the proposal made by the highest bidder. To that
end, the activist commenced a lawsuit demanding that the company hold
an annual meeting before any "scorched earth" transactions that would
allow shareholders to vote.
The board responded to this letter
today by saying that it will not sell the business at $17 per share but
would be perfectly willing at $21. According to the board, "It is
important that there be no misunderstanding of the Board's position. We
are opposed to selling the company at $17 per share. We are not opposed
to selling the company."
In the end, it will be interesting to
see what becomes of this fight. Oracle clearly has interest in the
company at $17 per share while many BEA shareholders are willing to be
sellers - including Carl Icahn. Whether or not a sale actually goes
through remains to be seen, but this is definitely a stock worth watching!
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