Harbinger plots to gain control of Openwave

Harbinger Capital Partners is hoping to buy Openwave Systems Inc. at closeout prices.
The investment firm is looking to buy more than 40 million Openwave shares at $8.30 each-a 4% premium over the company’s average trading price over the last month, but a 35-cent discount from the price at Monday’s close. Harbinger already holds 11 million shares of Openwave, and the proposed $335 million deal would give the firm 62% of Openwave’s outstanding shares.
Harbinger-which is already Openwave’s second-largest shareholder-has unsuccessfully fought to reconfigure the company’s board amidst a protracted proxy battle. The investment firm is hoping to merge the company with privately held BridgePort Networks and install BridgePort chief Mike Mulica as CEO.
Openwave was snagged last year in a stock-option backdating scandal that ensnared a host of tech companies, and its stock has continued to slide from its April 2006 price of $22.95. The company earlier this year retained Merrill Lynch as a financial adviser to explore strategic alternatives including a possible sale.
“For nearly a year, this board has stood by as Openwave dramatically underperformed market expectations,” said Harbinger Managing Director Howard Kagan. “It has refused to seat a Harbinger board candidate who received 57% of the stockholder votes at the January 2007 annual meeting. Still, after two months, no transaction has been announced and the company’s operations continue to struggle.”
Harbinger’s offer is set to expire June 19 unless it is extended. Openwave shares lost ground following Harbinger’s announcement, but rebounded and were trading at $8.61 by midday Tuesday.