BEA Systems, Inc.,
whose recent negotiations with Oracle Corporation over its sale price, have let Oracle’s offer of $17/share for $6.6 billion pass, continues to insist that its shares are worth $21/share, or $8.2 billion.
Last week Oracle ruled out any further dealings with BEA after its offer expired on October 28th, but did not actually rule out the possibility of another offer. Oracle, with a market value of more than $100 billion, called BEA's $21/share price "impossibly high," arguing that this price represented an 80 percent premium to BEA shares. However, Robert Stimson, a WR Hambrecht analyst, indicated that he was certain that Oracle would be back again, this time most likely with a tender offer directly to BEA shareholders if BEA's Board of Directors does not accept Oracle’s new offer.
A potential proxy battle is brewing between BEA’s Board of Directors and shareholder, Carl Icahn, who owns almost 15 percent of BEA’s voting shares. Icahn, a billionaire investor before he invested in BEA, wants BEA shareholders to have the opportunity to vote on the highest bid for the shares, even if it is only $17/share, Oracle’s original offer. Icahn has stirred the pot with the Board and with the shareholders by previously insisting that BEA’s stock was worth far more than $17/share; yet now he has turned the tables and is carping about the Board’s failure to accept the Oracle $17/share offer. Icahn has now also threatened to sue BEA’s Board of Directors and the company, as well as launch a proxy battle for control of the company, if the Board fails to allow BEA shareholders to vote on BEA's future sale.
Rumors of a BEA buyout began in August when Icahn began acquiring shares in the middleware business software manufacturer and called for BEA’s Board to put the company up for sale. BEA has not filed full financial results since the quarter ended April 2006, as it claims it is auditing its books after discovering irregularities in stock options grants. As it has been unable to file its financials BEA said its full value has not yet been shown.
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