The news came yesterday, two days after Icahn revealed he was ready to file a lawsuit against BEA to demand a shareholder vote on the Oracle takeover offer.
Oracle’s unsolicited $17 per share bid for BEA expired at 5pm in California yesterday, and the company confirmed that the offer is now off the table.
That offer expired today, Oracle said in a statement. The BEA shareholders should not assume that Oracle will renew its $17 per share offer in the future.
The company laid the blame at the feet of the BEA board of directors, which had rejected the $17 offer and, late last week, had insisted on $21 per share as a more suitable price.
BEA’s share price on Friday fell below $17 for the first time since Oracle’s offer was announced three weeks ago, closing the week at $16.50 and recovering just slightly in after-hours trading.
Oracle, in a barely veiled reference to billionaire shareholder Icahn, said BEA shareholders should hold the board responsible for its stubbornness.
We asked the BEA Board to allow their shareholders to vote on our $17 per share proposal. They chose not to, Oracle said. 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 was on pretty safe ground here, given Icahn has now publicly expressed his frustration with BEA’s refusal to entertain the Oracle bid.
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, he wrote in an open letter late Friday.
Icahn said he is already commencing a lawsuit to force a BEA annual shareholder meeting before the company indulges in any scorched earth tactics — transactions that would make the company unattractive to buyers, such as sales, acquisitions or stock issuances.
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, he said. This lawsuit can easily be avoided.
Icahn said he owns 58 million shares and equivalents in BEA. This makes him the largest BEA shareholder, with over 13% of the company.
Oracle, no stranger to hostile takeovers after its protracted battle for PeopleSoft a few years back, appears on current evidence to have judged the situation with BEA perfectly.
Its $17 bid was a reasonable premium of 21% over BEA’s closing price the day before the offer was announced, presumably adequate for many shareholders.
But perhaps more importantly, it was a 44% premium over the price BEA traded at before Icahn’s interest in the company became public during the summer, so Icahn stands to make a handsome return if BEA sells at $17.
BEA, currently undergoing a lengthy internal review of its stock options grant practices, hasn’t filed any formal accounts with the Securities and Exchange Commission since August 2006.
The company has insisted that when the probe closes and the health of its business becomes apparent, investors will realize that BEA is worth more than Oracle has offered.
Icahn initially appeared to share this view, and publicly stated that BEA was worth more that $17. This view appeared to change when no rival bidders stepped forward to challenge Oracle.
His attitude to BEA’s board is now hostile. Even ignoring the pending lawsuit, his Friday letter made a number of accusations directly at the board.
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, he wrote.
BEA’s board had said on Thursday that it was prepared to authorize negotiations with third parties including Oracle at a price of $21.00 per share, an offer swiftly and testily refused by Oracle, which called the price tag impossibly high.
Oracle’s statement yesterday seemed also designed to cause more uncertainty with BEA investors, potentially pushing BEA’s price down further.
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, the company said.
For now, it appears that while Oracle maintains its interest in BEA, it is going to let Icahn do most of the arm-twisting. Icahn seems on current evidence to be happy to do so.
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, Icahn wrote on Friday, referring presumably to past record of options granting problems.
