Carl Icahn Sends A “Cover Your Assets” Letter to BEA Systems (BEAS, ORCL)

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Carl Icahn has decided to try seizing the day at BEA Systems (NASDAQ:BEAS) by keeping management from killing the buyout and shooting shareholders in the feet.  While he did agree initially that the $17 offer from Oracle Corp. (NASDAQ:ORCL) was inadequate, but he obviously doesn’t want the demand from the board of BEA Systems that a $21.00 price be the floor on a "take it or leave it" basis.  He has sent a letter urging the company to entertain an offer by allowing shareholders to conduct an auction to sell or reject the highest bidder.  He thinks shareholders should have the right to sell at $17 to Oracle if they choose and if no higher bid emerges.

-Jon C. Ogg

Jon Ogg produces the 24/7 Wall St. Special Situation Investing Newsletter; he does not own securities in the companies he covers.  You can also join the bi-weekly free email newsletter that contains more preliminary data on broader topics in IPO’s, Buyouts, Spin-Offs, Reorganizations, and more.


October 26, 2007

    To The Board Of Directors Of BEA:

    I am the largest shareholder of BEA, holding over 58 million shares and
equivalents. I am sure that the BEA Board would agree with me that it would
be desirable not to have to put BEA through a disruptive proxy fight, a
possible consent solicitation and a lawsuit. This can be very simply
avoided if BEA will commit to the two following conditions:

    — BEA should allow its shareholders to decide the fate of BEA by
conducting an auction sale process and allowing the shareholders to accept
or reject the proposal made by the highest bidder. BEA should not allow the
stalking horse bid from Oracle to disappear (failure to take the Oracle bid
as a stalking horse would be a grave dereliction of your fiduciary duty in
my view). If a topping bid arises, then all the better. 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 – – not this Board,
members of which presided over the reprehensible "option" situation at BEA,
a Board that has watched while, according to Oracle in its September 20,
2007 conference call, Oracle’s Middleware business "grew 129% compared with
the decline of 9% for BEA".

    — BEA should agree not to take any action that would dilute voting by
issuing stock, entrench management or derail a potential sale of BEA. We
are today commencing a lawsuit in Delaware demanding the holding of the BEA
annual shareholder meeting before any scorched earth transactions (such as
stock issuances, asset sales, acquisitions or similar occurrences) take
place at BEA, other than transactions that are approved by shareholders. As
we stated above, this lawsuit can easily be avoided.

    Your recent press releases regarding Oracle’s proposal to acquire BEA
indicate to me that you intend to find ways to derail a sale and maintain
your control of the company. In particular I view your public declaration
of a $21 per share "take it or leave it" price as a management entrenchment
tactic, not a negotiating technique. BEA is at a critical juncture and it
finds itself with a "holdover Board". BEA has not held an annual meeting in
over 15 months and has not filed a 10K or 10Q for an accounting period
since the quarter ended April 30, 2006. Those failures have arisen out of a
situation that occurred under the watch of many of the present Board

    You should have no doubt that I intend to hold each of you personally
responsible to act on behalf of BEA’s shareholders in full compliance with
the high standards that your fiduciary duties require, especially in light
of your past record. Responsibility means that shareholders should have the
choice whether or not to sell BEA. BEA belongs to its shareholders not to
                                   Very truly yours,

                                   Carl C. Icahn