UPDATE 3-Icahn mentors BEA as stock down, bid expiry looms

(Adds Icahn statement calling for auction)

By Megan Davies

NEW YORK, Oct 26 (Reuters) - Activist investor Carl Icahn on Friday called for BEA Systems Inc BEAS.O to auction itself to the highest bidder and let shareholders decide its fate, two days before a $6.7 billion offer from Oracle Corp (ORCL.O: Quote, Profile, Research, Stock Buzz) was set to lapse.

Icahn, BEA's biggest shareholder with about 15 percent of its stock, accused BEA of attempting to derail a sale of the software company after it rebuffed Oracle's offer and named an asking price of $8.2 billion, or $21 a share.

"If a topping bid arises, then all the better," Icahn said of his proposed auction. "But if no topping bid arises it should be up to the BEA shareholders to decide whether to take the Oracle bid or remain as an independent company," he said in a letter to BEA's board released in a filing with the U.S. Securities and Exchange Commission.

Oracle, the world's third-largest software maker with a market value of about $100 billion, has set a deadline of Sunday at 5 p.m. California time for BEA to accept its $17-per-share bid, "at which time Oracle will move on and evaluate other potential acquisitions."

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 Oct. 12, as the deadline for the offer loomed with no signs of an agreement.

Icahn also demanded that BEA not take any action that would dilute shareholder voting power by issuing stock, entrench management or derail a potential sale.

He said in the letter he was starting a lawsuit in Delaware to demand BEA hold a shareholder meeting before undertaking any actions such as issuing stock or selling assets.