March 9, 2011 / 4:52 AM / 9 years ago

EXCLUSIVE-Lawson Software hires adviser to explore deal

* Barclays hired to review options -sources

* Buyers contacted; early-stage talks -sources

* Shares surge 13 pct

(Adds Lawson Software market capitalization)

By Nadia Damouni

NEW YORK, March 8 (Reuters) - Lawson Software LWSN.O has hired Barclays Capital (BARC.L) in recent weeks to explore a possible sale of the business software maker, two people familiar with the process told Reuters on Tuesday.

The review of strategic alternatives is in the early stages and could include other options, the sources said. Billionaire investor Carl Icahn owns about one-tenth of the company.

Prospective buyers have been contacted, said the sources, who declined to be named because the talks are not public.

Lawson’s shares surged more than 13 percent after the news to close at $11.19 on Nasdaq, bringing its market capitalization to $1.83 billion.

Several tech giants could buy Lawson, including Hewlett-Packard Co (HPQ.N), International Business Machines Corp (IBM.N), Microsoft Corp (MSFT.O), Oracle Corp ORCL.O and SAP (SAPG.DE), the sources said. Privately held Infor, owned by Golden Gate Capital, could also be interested, they said.

Private equity firms could also be drawn by Lawson’s stable cash flows, these sources said.

Lawson’s legacy businesses in financial and human resources applications in healthcare, retail and education are highly regarded. But some analysts criticize its transformational 2005 deal with Intentia.

“The acquisition of Intentia provided Lawson incremental growth following the acquisition, but over the last few years has not been a growth area for them,” Ajay Kasargod, a software analyst at Morgan Keegan, said.

Some of the assets that Lawson acquired operate at a lower margin, and if sold would boost profitability, Kasargod said.

Barclays Capital declined to comment. A spokesman for Lawson was not immediately available.

Icahn has ratcheted up his stake in Lawson to 10.8 percent from the 8.5 percent initial stake he disclosed last May. At that time, Icahn called Lawson’s shares undervalued, and said he would discuss its business and operations with management.

Earlier Tuesday, Icahn revealed he would return $1.75 billion of outside capital to investors, reducing the potential headaches from handling other people’s money. [ID:nN08205210]

Separately, Icahn is in the early stage of exploring a sale of auto parts supplier Federal-Mogul Corp (FEDM.BO) and has retained Lazard Ltd (LAZ.N) as an adviser, people familiar with the matter told Reuters on Monday. [ID:nN07119164]

In February, Icahn also offered $1.73 billion for Mentor Graphics Corp MENT.O, and predicted the move would flush out higher bids for the chip-design software maker.

A six-week window allows activists to nominate a new slate of Lawson directors, a source familiar with the matter said.

Lawson’s fiscal year ends May 31. It has not set a date for its annual meeting, which is typically held in October.

“Lawson is probably getting some advice on their alternatives,” including whether to remain independent and make further acquisitions, said the source.

Last year, Lawson paid $70 million cash for software services company Enwisen, and $160 million for Healthvision Solutions, that connects clinical, financial and operational information.

(Reporting by Nadia Damouni; Editing by Kenneth Li, Richard Chang, Gary Hill); +1 646 223 6356; Keywords: LAWSONSOFTWARE/ UPDATE 3, Keywords: LAWSONSOFTWARE/ UPDATE 3,

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