Monday, October 29, 2007
Icahn Sues BEA, Demands Shareholder Vote (BEAS, ORCL)
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!

Related Companies
Oracle Corporation (ORCL)
Sun Microsystems (JAVA)
Tibco Software (TIBX)

10/29/2007 3:32:10 PM UTC  #    Comments [0]  |  Trackback
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