Sybase agrees to buy back 11.6% of its stock, avoids proxy contest with Sandell Asset Management

By Lisa Kerner

Charlotte, N.C., Feb. 26 - Sybase, Inc. said it will begin a modified Dutch auction self-tender offer to purchase $300 million worth of its common stock, or some 11.6%, at a price per share not less than $28 and not greater than $30.

The self-tender, funded by cash on hand, is part of an agreement between Sybase and Sandell Asset Management Corp. to avoid a proxy contest at Sybase's 2008 annual meeting on April 15.

Following the completion of the offer, Sybase will have a remaining share repurchase authorization of $82.9 million.

Sybase agreed with Sandell, a 6% shareholder along with its affiliates, to use "reasonable best efforts" to complete the repurchase of shares before the company's 2009 annual meeting, it was reported in a schedule 13D filing with the Securities and Exchange Commission.

For its part, Sandell has agreed:

• Not to solicit proxies in connection with the 2008 annual meeting;

• To vote its shares in support of all of the Sybase board's director nominees at the 2008 and 2009 annual meetings; and

• To abide by certain standstill provisions through the completion of the 2009 annual meeting.

Previously, Sybase called Sandell's proposal for a larger stock buyback, a separation of the company's mobility and database businesses or an auction of Sybase "short-sighted, inadvisable and ill-timed."

The investor had urged Sybase to incur debt to conduct a larger stock buyback and said it planned to nominate three directors for election to the company's board at the 2008 annual meeting.

Sybase, a Dublin, Calif., software company, reported a current worldwide cash balance of $735 million and an available cash balance of about $700 million, according to a prior company news release.

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