UPDATE 2-Oracle withdraws BEA offer as deadline expires

(Adds analyst comment, background, pvs dateline NEW YORK)

By Jim Finkle

BOSTON, Oct 28 (Reuters) - Oracle Corp (ORCL.O: Quote, Profile, Research, Stock Buzz) withdrew a $6.7 billion bid for business software maker BEA Systems Inc BEAS.O on Sunday, setting the stage for a proxy battle between activist investor Carl Icahn and the BEA board.

The world's No.3 software maker pulled the $17-per-share bid after a deadline lapsed with no sign BEA had budged from its view that it was worth $21 a share, or $8.2 billion in total.

"BEA shareholders should not assume that Oracle will renew its $17 per share offer in the future," Oracle said in a statement. "Over time many things can change: BEA's business might materially weaken, the stock market can fall further from its recent record highs, or Oracle may have committed its capital elsewhere."

All eyes are now on a possible proxy battle between billionaire investor Icahn, who is BEA's biggest shareholder with a 15 percent stake, and the BEA board.

Icahn on Friday called on BEA to auction itself off, saying shareholders should be allowed to vote on the highest bid -- even if that turns out to be from Oracle.

Icahn said he would be willing to accept Oracle's bid if a higher one did not emerge, and threatened to sue BEA as well as launch a proxy battle for control of the company if its board did not let shareholders decide BEA's fate.

Officials with BEA could not immediately be reached for comment. The company said last week it was worth $21 per share and dismissed Oracle's offer as undervaluing the company.