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Bonds News

UPDATE 2-Sybase holder urges company sale to boost shares

(Adds analyst comment, updates share price)

SAN FRANCISCO, Oct 12 (Reuters) - A key shareholder of Sybase Inc SY.N on Friday urged the business software provider to put itself up for sale or take other quick steps to boost its stock price, sending its shares up more than 4 percent.

Sandell Asset Management Corp, which owns 6 percent of Sybase shares, said in a letter to Sybase Chief Executive John Chen that the company should consider a share buyback, an initial public offering and spin-off of its mobility segment or a sale of all or part of the company.

“The board has a fiduciary duty to consider all options to maximize the value of these assets, and we challenge management and the board to present a plan to enhance value with low levels of risk,” Sandell Asset CEO Thomas Sandell said in a statement.

Sybase officials were not available for comment.

Sandell's proposals came on the same day that Sybase's larger competitor Oracle Corp ORCL.O made an unsolicited $6.7 billion bid for business software maker BEA Systems Inc BEAS.O, sending BEA's shares up by as much as 33 percent.

Oracle's main competitor, Germany's SAP AG SAPG.DE, on Sunday offered 4.8 billion euros ($6.8 billion) for the data-mining company Business Objects BOBJ.PA as SAP seeks to double its customer base to 100,000 by 2010.

Shares of Sybase, down 1 percent this year as of Thursday’s close, were up $1.01, or 4.1 percent, at $25.47 in late trading on the New York Stock Exchange, giving it a market value of about $2.3 billion.

Analyst Trip Chowdhry of Global Equities Research said Sybase’s stock is “fairly valued,” and added that Sybase customers would likely oppose a sale of the company.

“We haven’t heard customers saying they want Sybase to be sold,” said Chowdhry, who has an “overweight” rating on the shares. “I don’t think a Sybase sale would be happening any time in the future until customers demand it. What they like about Sybase is its strong responsiveness.”

Sandell estimated that Sybase shares could show “improvement up to $39 over time” if it takes the investment management company’s advice. Such a stock price would mark an all-time high for Sybase.

“We are concerned that the company will use capital for risky and unnecessary acquisitions while there are several low-risk opportunities within the company to significantly improve value,” he said. (Reporting by Philipp Gollner in San Francisco, Paul Thomasch in New York and Supantha Mukherjee in Bangalore)

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