Updated from 11 a.m.

Liberate Technologies

said it offered $21 a share to take

USA Truck

(USAK) - Get Report

private after talks went awry, but the trucking company said it had had no formal discussions with Liberate.

News of the unsolicited bid sent shares of Van Buren, Ark.-based USA Truck up 17% in morning trading. Liberate has previously announced a 5% stake in USA Truck and indicated in a letter to USA Truck that it has previously proposed to buy the transportation company, to no avail.

But the rally softened considerably after USA Truck's response cast doubt on Liberate's claims. Shares were recently up 10%.

Liberate, once a provider of software for digital cable television systems, sold substantially all of its assets in 2005. It has since emerged as a big shareholder at USA Truck and

Autobytel

(ABTL)

.

"We are writing to express publicly what we have told you privately over the past months," Palo Alto, Calif.-based Liberate writes in a letter to USA Truck President Jerry Orler. "By putting on paper our proposal and intentions, we hope to clearly state our offer and break the current impasse in our discussions.

"We appreciate the constructive dialogue over the past months and your timely response to our questions. We also appreciate the directness with which you personally have communicated with us and the willingness to consider our viewpoints."

But, Liberate adds, "The company's financial structure ... does not do justice to its operational excellence. In short, USAK should be a private company. The costs -- Sarbanes-Oxley, accounting, compliance, financial reports, proxies, directors and tax on management time and effort -- exceed the benefits of a public company structure."

Liberate said USA Truck could easily afford to have more debt, too.

Liberate said it would consider raising its offer if USA Truck would open its books. The company said it seeks a response by Oct. 5.

On Friday, USA Truck took issue with Liberate's claims.

"Liberate Technologies suggests that it has been involved in an ongoing dialogue with USA Truck regarding such a proposal," the company said in a midafternoon press release. "However, the contact between Liberate Technologies and USA Truck has been limited to a few informal telephone conversations initiated by representatives of Liberate Technologies with USA Truck's management since late August 2006.

"Our Board of Directors will review and respond to any serious proposals in appropriate circumstances. However, we have received no written correspondence or offer from Liberate Technologies, nor has that company indicated to us any detailed terms and conditions or any specific structure or timing of any proposed transaction.

"In the telephone conversations referred to above, Liberate Technologies has made a general suggestion that USA Truck should consider 'going private' in a transaction involving Liberate Technologies and indicated that they believe $21 per share would be an appropriate price for such a transaction. Although Liberate Technologies has not made any formal offer that would merit a more specific response from us, USA Truck's current strategy approved by our Board of Directors contemplates the continued growth of our fleet, aggressive management of operating expenses and other initiatives designed to facilitate long-term growth for the benefit of all our stockholders."

USA Truck rose $1.73 to $18.88.