With Icahn Threatening, BEA Lets Oracle Offer Expire

BEA Systems' Board of Directors let Oracle's $17-per-share buyout offer evaporate on Sunday night, as a new threat against the current corporate leadership swirled in the background - - namely a threat from corporate raider Carl Icahn, BEA's top shareholder.

In a press release, Oracle announced its offer -- originally made on Oct. 9 -- had lapsed, as Oracle's deadline for a positive response from BEA came and went without action. BEA's board had previously said they couldn't consider any offer south of $21 per share.

"The BEA shareholders should not assume that Oracle will renew its $17 per share offer in the future," Oracle said in its late-Sunday statement. "Over time many things can change: BEA's business might materially weaken, the stock market can fall further from its recent record highs, or Oracle may have committed its capital elsewhere."

Oracle, though, invited disgruntled shareholders to stand up to BEA's board and force action:

"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 wrote. The remark appeared to play into Icahn's hands.

As BEA waved off the last attempt by Oracle to buy it at $17 per share (with BEA directors demanding $21 per share), Icahn held out the prospect of a protracted, ugly fight for company leadership. Icahn sent a letter to BEA Friday night, decrying the company's stance against Oracle's acquisition offer and suggesting he would launch his own proxy fight for control of BEA.

Icahn, in his letter to BEA's board, reminded them that he controls more than 58 million shares. He mentioned the fact that the company hasn't filed several mandatory reports with the U.S. Securities and Exchange Commission as it sorts through an options backdating scandal, as well as the fact that BEA has postponed its annual shareholders meeting where new directors could be elected.

In the letter, Icahn was pointed in his criticism that BEA's directors were letting the Oracle offer slip by without using it to at least try to solicit other offers.

"BEA should not allow the stalking horse bid from Oracle to disappear (failure to take the Oracle bid as a stalking horse would be a grave dereliction of your fiduciary duty in my view,) Icahn wrote. "If a topping bid arises, then all the better."

Icahn demanded BEA's directors put the company up for auction and let shareholders vote on which offer, if any, to accept.

"Your recent press releases regarding Oracle's proposal to acquire BEA indicate to me that you intend to find ways to derail a sale and maintain your control of the company," Icahn wrote. "In particular I view your public declaration of a $21 per share 'take it or leave it' price as a management entrenchment tactic, not a negotiating technique."

BEA's shares ended trading on Nasdaq Friday at $16.50, fifty cents below Oracle's offer.

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