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BEA Giving Confidential Information to Icahn

Reuters
Monday, 5 Nov 2007 | 11:00 AM ET

Business software maker BEA Systems said it would provide confidential information to shareholder Carl Icahn explaining why it rejected a $17-per-share takeover bid from Oracle.

BEA said Icahn, who has criticized the BEA board for rejecting the bid, signed a nondisclosure agreement so that he could receive the confidential information.

Icahn, an activist investor, is BEA's biggest shareholder with a 15 percent stake.

Icahn has threatened to sue the BEA board and start a proxy battle for control of the company if it does not put itself on the auction block. He has also said that if an auction process results in a sale at $17 per share, he would be willing to support such a deal.

BEA has insisted that any negotiations to sell the company start at $21 per share, which would value BEA at $8.2 billion.

The offer from Oracle was worth $6.7 billion.

BEA has said it cannot fully disclose to the public why it rejected Oracle's offer because the information is confidential. It said on Monday that it would explain to Icahn why it is worth more than $17 per share.

The matter may have to do with the fact that BEA is behind in filing its full financial statements due to an audit of its books related to improper booking of options grants.

Some analysts have speculated that the company may have secret products in development that it believes will be blockbusters. Company officials have declined comment.

Icahn has said he is concerned that the board might engage in so-called "scorched-earth" efforts to make itself unattractive to potential bidders.

In a press release announcing the nondisclosure agreement with Icahn, BEA Chief Executive Alfred Chuang said, "We ... want to dispel any speculation that we would engage in 'scorched-earth' transactions to entrench ourselves at shareholders' expense or discourage a fully valued acquisition of the company. We will undertake no such transactions."

Since Oracle withdrew its bid on Oct. 28, investors have bet BEA is not worth much more than $17 per share. Its stock closed at $16.97 on Friday and was down slightly Monday on Nasdaq.

After reviewing the confidential material that BEA provides him, it is possible that Icahn will make public comments as to whether he agrees with the company's statement that it is worth $21 per share.

His comments could affect investors' impressions of the company's statements about its valuation.

Icahn could not be reached for comment.

A spokeswoman for Oracle, Deborah Hellinger, declined to comment.

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