Icahn To Board: "BEA Belongs To Its Shareholders, Not To You"

So, Oracle (ORCL) really did let its $17-a-share bid for BEA (BEAS) expire on Sunday. But the story is not over yet. Carl Icahn, who owns a 13.2% stake in BEA, on Friday disclosed in an SEC filing that he has filed a lawsuit in Delaware demanding that the company hold a shareholders meeting. And Oracle’s announcement of the expiration of the deal seems designed both to insult BEA and to egg on Icahn.

Here’s is the text or Oracle’s latest release:

REDWOOD SHORES, Calif., Oct. 28, 2007— On October 9th, Oracle proposed to acquire BEA for $17 per share. That offer expired today, October 28th, at 5:00 pm. The BEA shareholders should not assume that Oracle will renew its $17 per share offer in the future. 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.

Over the last twenty 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.

Here is the letter Icahn wrote to the BEA board, as disclosed in the Friday filing:

October 26, 2007

BEA Systems, Inc.
2315 North First Street
San Jose, California 95131

To The Board Of Directors Of BEA:

I am the largest shareholder of BEA, holding over 58 million shares and equivalents. I am sure that the BEA Board would agree with me that it would be desirable not to have to put BEA through a disruptive proxy fight, a possible consent solicitation and a lawsuit. This can be very simply avoided if BEA will commit to the two following conditions:

o BEA SHOULD ALLOW ITS SHAREHOLDERS TO DECIDE THE FATE OF BEA BY CONDUCTING AN AUCTION SALE PROCESS AND ALLOWING THE SHAREHOLDERS TO ACCEPT OR REJECT THE PROPOSAL MADE BY THE HIGHEST BIDDER. 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). 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 - - not THIS Board, members of which presided over the reprehensible “option” situation at BEA, a Board that has watched while, according to Oracle in its September 20, 2007 conference call, Oracle’s Middleware business “grew 129% compared with the decline of 9% for BEA”.

o BEA SHOULD AGREE NOT TO TAKE ANY ACTION THAT WOULD DILUTE VOTING BY ISSUING STOCK, ENTRENCH MANAGEMENT OR DERAIL A POTENTIAL SALE OF BEA. We are today commencing a lawsuit in Delaware demanding the holding of the BEA annual shareholder meeting before any scorched earth transactions (such as stock issuances, asset sales, acquisitions or similar occurrences) take place at BEA, other than transactions that are approved by shareholders. AS WE STATED ABOVE, THIS LAWSUIT CAN EASILY BE AVOIDED.

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. 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 is at a critical juncture and it finds itself with a “holdover Board”. BEA has not held an annual meeting in over 15 months and has not filed a 10K or 10Q for an accounting period since the quarter ended April 30, 2006. Those failures have arisen out of a situation that occurred under the watch of many of the present Board members.

You should have no doubt that I intend to hold each of you personally responsible to act on behalf of BEA’s shareholders in full compliance with the high standards that your fiduciary duties require, especially in light of your past record. Responsibility means that SHAREHOLDERS SHOULD HAVE THE CHOICE whether or not to sell BEA. BEA belongs to its shareholders not to you.

Very truly yours,

/s/ Carl C. Icahn
—————–
Carl C. Icahn

Comments

[Burns]

Well, BEA better pray that Oracle will put the deal back on the table. Carl Icahn's law suit isn't the only one they have to worry about, hundreds (if not thousands) of other investors are probably planning similar action as we speak. You can bet the BEA Board will be scrambling to contact Oracle in the near future www.newsvisual.com/new...