Icahn threatens proxy fight if BEA unsold

By Megan Davies and Jim Finkle

NEW YORK/BOSTON (Reuters) - Activist investor Carl Icahn threatened on Friday to launch a proxy battle for control of BEA Systems Inc BEAS.O if the software maker does not begin an auction process to sell itself.

He also demanded in a letter to the BEA board that it let shareholders vote on the best bid that emerges from an auction, including an existing $6.7 billion offer from Oracle Corp (ORCL.O: Quote, Profile, Research, Stock Buzz) if it turned out to be the highest.

Icahn, BEA's biggest shareholder with about 15 percent of its stock, wrote to BEA's board two days before Oracle's $17-a-share bid was set to lapse. BEA has rejected the bid, saying it was worth $21 a share, or $8.2 billion.

"It's completely insane to lose a stalking horse," Icahn said in an interview with Reuters, referring to Oracle.

Shares of BEA fell 6 percent to $16.50 on Friday to trade below Oracle's bid for the first time since it was made on October 12, as no signs of an agreement emerged ahead of the deadline.

Oracle, the world's third-largest software maker with a market value of about $100 billion, has given BEA's board until Sunday at 5 p.m. California time to accept, after which Oracle will "move on and evaluate other potential acquisitions."

Icahn said he would like to get more than the $17 per share Oracle has offered and that higher bids could emerge if the board would just put the company up for sale.

"I'm not saying I accept 17," Icahn told Reuters. "It's going to be a three-month process."