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BEA Systems, Icahn Meeting Looks Likely

A sitdown could happen in the next two or three weeks.

SAN FRANCISCO -- A sitdown between BEA Systems and activist investor Carl Icahn looks to be in the cards.

A source close to the matter said late Friday that executives look forward to the possibility of speaking with Icahn or his representatives -- and that a meeting is likely within the next two to three weeks.

Icahn's hedge fund has recently raised its stake in BEA to 9.9%.

In a filing with the

Securities and Exchange Commission

late Thursday, BEA disclosed that Icahn now owns 38.7 million shares and options. That's an increase of 5.3 million shares during the past week.

The stock has risen nearly 7% to $13.59 over the past seven days, as feeder fish hedge funds and investors follow Icahn's moves.

Icahn's firm said

in a filing Sept. 14 that it intended to ask management for a meeting to discuss the company's future, including the possibility of a merger with a "strategic acquirer."

BEA has long been considered a takeover candidate for other big tech firms, such as

Hewlett-Packard

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,

Oracle

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, or

IBM

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.

BEA Chief Executive Alfred Chuang holds the view that BEA, the developer of business middleware application software, would be better able to innovate as a standalone company than as part of a giant firm.

Icahn may merely be looking for BEA to disburse some of its cash to shareholders. The company has approximately $1 billion on the books. BEA's authorized share repurchase plan will spend $622 million of that, but the company can't buy back shares until it completes its financial restatements stemming from its former options backdating practices.

That process is about to come to a close. BEA has completed the options backdating investigation and submitted its revised financial statements to its accounting firm, according to the company.

Another activist investor, Naples, Fla.-based Private Capital Management, is the largest outside shareholder in BEA, with 41.4 million shares, or 10.6% of BEA. PCM has been a silent owner in BEA for some time, although PCM founder Bruce S. Sherman has a reputation as an activist investor.

Sherman was the instigator who pushed for the sale of Knight Ridder in 2006. In that case, Sherman kept his communications with management quiet until late in the process. BEA makes up 2.66% of PCM's portfolio, according to Thomson Financial.

New York City-based hedge funds J&W Seligman and Third Point have also opened stakes in BEA. Seligman added 9.2 million shares recently, bringing its stake up to 10.7 million shares. And Third Point bought 9.7 million shares in the second quarter, according to its most recent filing.