UPDATE 2-BEA says still looking to sell at $21 per share

Mon Oct 29, 2007 4:28pm EDT

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(Adds background, analyst comment, updates shares)

By Jim Finkle

BOSTON Oct 29 (Reuters) - Software maker BEA Systems Inc's BEAS.O board said on Monday it is holding out for a $21-a-share takeover offer, or $8.2 billion in total, a day after larger rival Oracle Corp ORCL.O withdrew its bid.

BEA reiterated its position after its biggest shareholder, Carl Icahn, called for the business software maker to be put up for auction.

Oracle has been the only company to publicly offer for BEA, but withdrew a $17-per-share bid on Sunday after BEA said it was too low.

"We are prepared to authorize negotiations to sell the company at a price of $21 per share," the BEA board said in a letter to Icahn on Monday.

BEA shares rose as much as 3.4 percent to $17.06 on Nasdaq on Monday, before ending the session unchanged from Friday's close.

Last week Oracle ruled out any action after Sunday, but in withdrawing its bid it did not rule out the possibility of another offer. "The BEA shareholders should not assume that Oracle will renew its $17 per share offer in the future," Oracle said on Sunday.

WR Hambrecht analyst Robert Stimson said he was sure that Oracle will be back, most likely with a tender offer directly to shareholders if BEA's board does not accept an offer to the liking of Oracle Chief Executive Larry Ellison.

"When Larry Ellison sets his mind to something, he won't let it go," Stimson said. "They'll be back."

Analysts have said other possible bidders for BEA include International Business Machines Corp (IBM.N) and Hewlett-Packard Co (HPQ.N). Both companies have declined comment.

Germany's SAP AG (SAPG.DE), another potential candidate, has said it is not interested, and reiterated that on Monday.

All eyes are now on a possible proxy battle between the BEA board and Icahn, who owns 15 percent of the company. The billionaire investor wants shareholders to get a chance to vote on the highest bid -- even if it is the $17 offer from Oracle.

Icahn has threatened to sue BEA as well as launch a proxy battle for control of the company if its board does not let shareholders decide BEA's fate.

BEA's software, known as middleware, helps connects computer systems. It would complement Oracle's database programs and business management software to help the company better compete against SAP.

Talk of a BEA buyout began in August when Icahn said he had begun acquiring shares in the business software maker and called on its board to put the company up for sale.

Oracle, which has a market value of more than $100 billion, had called BEA's $21 price "impossibly high," saying it was an 80 percent premium to BEA shares before activist shareholders pushed for a sale.

BEA has not filed full financial results since the quarter ended April 2006 as it is auditing its books after discovering irregularities in stock options grants. BEA said its inability to publish results meant it has not showed its full value.

Analysts say uncertainty over BEA's future could be demoralizing for its salesforce. A weak quarterly report could push BEA shares down, working to Oracle's advantage, Stimson said. (Reporting by Jim Finkle, editing Derek Caney/Tim Dobbyn)

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