FT.com / Companies / IT - Icahn criticises BEA over Oracle bid

FT.com / Companies / IT - Icahn criticises BEA over Oracle bid

Icahn criticises BEA over Oracle bid
By Richard Waters in San Francisco

Published: October 27 2007 03:30 | Last updated: October 27 2007 03:30

Activist investor Carl Icahn turned up the heat on BEA Systems on Friday, pressing the embattled software company to let shareholders decide on a $6.7bn bid from Oracle if no better offers emerge.

His call came after BEA had declared that it was quite prepared to let Oracle walk away rather than start negotiations at the price that is currently on the table.

Mr Icahn’s intervention late on Friday came as the two software companies prepared for a weekend of brinkmanship over the unsolicited bid. Oracle has promised to abandon its offer, of $17 a share in cash, by Sunday afternoon if BEA does not either accept the terms or agree to let its shareholders vote on the proposal.

For its part, BEA on Friday released a terse letter that repeated its view that the price “significantly undervalues” the company, and that it therefore assumed the offer would expire this weekend. The biggest independent maker of the “middleware” used to build internet-based applications, BEA has held out of a price of $21 before it will enter negotiations.

Rather than risk losing the premium represented by the Oracle bid, BEA should launch a full auction of the company, Mr Icahn said.

“If a topping bid emerges, then all the better,” he said. “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.”

One person familiar with the matter said BEA had held discussions with other technology companies since Oracle went public with its offer earlier this month. However, the nature of those discussions, or whether another bidder might emerge, was unclear.

Few rival bidders would be able to match the sort of cost savings from a deal that Oracle could achieve, according to analysts. One of the few that could, IBM, is BEA’s biggest rival, making it likely that any offer would attract anti-trust attention. The scale of the potential savings have led some analysts to suggest that Oracle could pay over $20 a share for BEA and still generate short-term financial benefits for its shareholders.

Copyright The Financial Times Limited 2007