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Sybase Leads Openwave Pack

Dan Jones
LR Mobile News Analysis
Dan Jones, Mobile Editor
5/29/2007

Mobile software firm Sybase Inc. is rumored to be the lead bidder for phone browser and messaging company Openwave Systems Inc. (Nasdaq: OPWV), but there are three or four other interested parties sniffing around, according to sources.

Sources say that Redwood City, Calif.-based Openwave is working with banker Merrill Lynch & Co. Inc. to secure a strategic acquisition. Unlike some recent deals both inside and outside of the telecom industry, however, there are apparently no private equity buyers on the prowl this time, other than hedge fund and Openwave investor Harbinger Capital Partners. Other PE firms view Openwave as "not sustainable," sources say.

Harbinger opened the bidding war on Openwave last week with a $335 million offer, or $8.30 a share, for 62 percent ownership of the company. It is recommending that Openwave merge with fixed/mobile convergence firm BridgePort Networks Inc. Openwave's board is still considering the offer, the company said in a statement.

But sources say Openwave is fishing for a better offer.

As Barron's reported over the weekend, Sybase has also thrown its hat into the ring. The software company is rumored to have submitted a bid in the range of $10.75 a share.

The mobile database and messaging firm is said to want staff cuts at Openwave as part of any acquisition agreement, to ensure that a merger is accretive to its top line. Openwave's board is said to be looking at the offer.

Openwave has had a long and checkered history in the mobile business. The firm first found success as WAP browser pioneer, Phone.com. The telecom bust wasn't kind to the company, however, and it has struggled to regain past glories over the last several years. (See Openwave: Wave of the Future or Wipeout? and Openwave Replaces CEO.)

The firm's stock is trading up 39 cents, or 4.23 percent, on the takeover rumors in after-hours trading .

— Dan Jones, Site Editor, Unstrung

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