Oracle pulls buyout offer for BEA Systems

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[b]Oracle on Sunday pulled its $6.7 billion buyout offer for BEA Systems, after the middleware maker refused to entertain its $17 a share bid before its deadline expired. [/b]

Oracle's action was largely anticipated, given the line in the sand the parties drew Friday. In a statement, after its 5 p.m. PST Sunday deadline passed, Oracle said BEA shareholders should not assume it will renew its $17 a share offer in the future.

"Over the last 20 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," Oracle said in a statement.

That message is not lost on BEA's largest shareholder, Carl Icahn. Before the deadline had passed, Icahn on Friday was gearing up for a potential standoff with the company.

The billionaire investor and shareholder activist, who initially agreed with BEA's board that the middleware enterprise software maker was more valuable than Oracle's offer of $17 a share, reiterated his demands that BEA let shareholders vote on the highest bid by any suitor. Otherwise, he warned, a potential lawsuit and proxy fight may be on the near horizon, according to a letter Icahn sent to BEA directors on Friday.

"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," according to Icahn's letter to BEA's board.

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The investor goes on to note such actions could be avoided if BEA's board agreed to let shareholders accept or reject the proposal from the highest bidder. Oracle was the only bidder who has publicly came forward with an offer, before the Sunday deadline.

Icahn also called on BEA's board agrees to avoid any steps that could potentially derail a sale, such as enacting a shareholder rights plan, or poison pill, that would flood the market with additional BEA shares.

"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 stated in his letter. "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."

After BEA announced Friday it would allow the deadline to pass, if the offer remained at $17 a share, the middleware maker's stock closed below Oracle's offer price. Previously, it had been trading in the $18 per share range during the three-week period that Oracle had its offer on the table.