Raider turned activist Carl Icahn on Wednesday, Oct. 3, stepped up his effort to have BEA Systems Inc. auction itself after he reported with the Securities and Exchange Commission that he and an investment group had hiked their cumulative stake in the business software company to 11.05%.
BEA Systems is based in San Jose, Calif. and has a $5.4 billion stock market capitalization.
Icahn's increased stake indicates that Icahn believes he needs more leverage to obtain his goals at BEA. In any case, he's definitely not backing down in the face of opposition from the company. On Sept. 14, Icahn, Icahn Partners LP and other investment partnerships reported purchasing an 8.5% stake in BEA Systems and called for the company to be sold. On Sept. 20, Icahn reported increasing his stake in BEA Systems to 9.88%. According to the Sept. 14 SEC filing, Icahn acquired his position because he believes the company’s shares are undervalued and BEA Systems’s technology could be utilized better as part of a larger unit.
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“[Icahn] believes that a strategic acquirer could utilize greater resources and market presence than [BEA] to advantage [BEA’s] innovative technology and thereby profit from higher revenue growth and the elimination of duplicative costs,” Icahn and investment partnerships wrote on Sept. 14. “[Icahn] believes consolidation in the technology industry is leading to increased competition that may place independent software vendors at a competitive disadvantage.”
And Icahn may still step up his insurgency a notch yet. In his Sept. 14 SEC filing, Icahn also threatened that he may nominate candidates to BEA’s board, noting that the company has not held an annual meeting since July 2006.
A proxy contest at BEA would follow a successful effort for Icahn at Bonita Springs, Fla.-based homebuider WCI Communities Inc. On Aug. 20, Icahn and two of his nominees won positions on the board of that company. The news at WCI comes nearly seven months after Icahn revealed a 14.6% stake in the company — which hasn't escaped the hammering on the U.S. housing market — called WCI undervalued and said he wanted to discuss the homebuilder's strategic course. WCI put itself up for sale in February, and Icahn unveiled plans for a tender offer in mid-March. — Ron Orol
Ron Orol is a reporter for The Deal and author of Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World.
