The merger back-story at BEAS…

February 7, 2008

images2.jpegA short time ago, BEA Systems (BEAS) filed its preliminary merger proxy which had lots of interesting details about the dance that finally led to Oracle’s (ORCL) deal to buy BEA for $19.37 a share. Now, granted, I almost always find the whole “background of the merger” stuff to be pretty juicy reading, but the back and forth that led up to this deal is far more operatic — or at least telenovelic — than most.

From the beginning, where the proxy talks about Oracle offering a way out of the oh-so-cumbersome SEC filing requirements that BEA was late on due to stock options issues to the secret meetings with Carl Icahn in New York, it’s a pretty interesting read. And then there’s also the bit that while Oracle’s initial $17 bid was on the table, BEA was shopping itself around to as many as 10 other companies. Here’s a particularly interesting snippet:

On October 24, 2007, at the direction of the board, representatives of Goldman Sachs had discussions with Mr. Icahn and certain of his associates, in which Mr. Icahn recommended that the BEA board of directors exempt Oracle’s $17.00 per share offer from BEA’s stockholder rights plan if the offer were supported by a majority of the shares. Mr. Icahn also stated that he intended to make a public announcement the following day regarding his recommendation. The BEA board of directors met telephonically and representatives of Goldman Sachs described the conversations that had occurred between them and Mr. Icahn. Representatives of Goldman Sachs stated to the board that they and BEA’s other advisors had discussed Mr. Icahn’s recommendation and statement that he would make a public announcement, and recommended to the board that it consider whether it should make an announcement that evening regarding the price at which the board would be prepared to discuss a sale of BEA.

As the filing notes, things only started moving again in early January when two of the three companies that BEA had been in discussions with — they never name names — dropped out and a third one said it wasn’t interested in acquiring BEA. Meanwhile, in the background, Ichan was getting Oracle to agree to the $19.37 price and a $500 million reverse termination fee in exchange for his vote. The deal was announced on Jan. 16.

There was one other interesting tidbit about BEA, but it was in the proxy that the company filed late yesterday: last year, the company spent nearly $200K to ferry Chairman and CEO Alfred Chuang between San Jose and San Francisco. Given what Icahn has said in the past about the “tremendous, tremendous waste” at companies, you have to wonder what he thinks about spending $200K on a car and driver.

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