Oracle Corp withdrew a $6.7 billion bid for business software maker BEA Systems Inc on Sunday, setting the stage for a proxy battle between activist investor Carl Icahn and the BEA board.

The world's No.3 software maker pulled the $17-per-share bid after a deadline lapsed with no sign BEA had budged from its view that it was worth $21 a share, or $8.2 billion in total.

BEA shareholders should not assume that Oracle will renew its $17 per share offer in the future, Oracle said in a statement. Over time many things can change: BEA's business might materially weaken, the stock market can fall further from its recent record highs, or Oracle may have committed its capital elsewhere.

All eyes are now on a possible proxy battle between billionaire investor Icahn, who is BEA's biggest shareholder with a 15 percent stake, and the BEA board.

Icahn on Friday called on BEA to auction itself off, saying shareholders should be allowed to vote on the highest bid -- even if that turns out to be from Oracle.

Icahn said he would be willing to accept Oracle's bid if a higher one did not emerge, and threatened to sue BEA as well as launch a proxy battle for control of the company if its board did not let shareholders decide BEA's fate.

Officials with BEA could not immediately be reached for comment. The company said last week it was worth $21 per share and dismissed Oracle's offer as undervaluing the company.

Analysts have speculated that Hewlett-Packard Co, IBM and SAP AG may want BEA, but they have not announced any offers so far. SAP has said it was not interested, while HP and IBM have declined to comment.

Oracle's withdrawal of its bid is unlikely to mark the end of its pursuit of BEA, analysts say, even though it has said it would move on and evaluate other potential acquisitions.

Trip Chowdhry, an analyst with Global Equities Research, said he was betting Oracle would return because BEA has technology that the bigger software maker can use.

BEA's software, known as middleware, helps connect computer systems and complements Oracle's database management programs to help the company better compete against SAP.

It's like buying a car that you want. Sometimes you have to walk away. But you come back, Chowdhry said. Oracle wants to strengthen its middleware offerings and BEA wants to get a good price ... There is an inherent love between the two.

Talk of a BEA buyout began in August when Icahn said he had begun acquiring shares in the business software maker and called on its board to put the company up for sale.

Amid a wave of mergers in the software industry that has seen SAP offer for Business Objects for example, shares of BEA had risen to as high as $18.94 as investors hoped the Oracle bid would spark other offers.

The stock fell almost 6 percent to $16.50 on Nasdaq on Friday, dipping below Oracle's bid for the first time since it was made on October 12, as investors lost hope that an agreement could be reached before a Sunday evening deadline expired.

Oracle, valued at more than $100 billion, had called BEA's $21 price impossibly high, saying it was an 80 percent premium to BEA shares before activist shareholders pushed for a sale, and nearly 11 times BEA's software maintenance service revenue in the last 12 months.

BEA has not filed full financial results since the quarter ended April 2006 as it is auditing its books after discovering irregularities in its stock options grants. BEA has said its inability to publish results has prevented it from showing investors how much it is really worth.

(Additional reporting by Tiffany Wu and Mike Flaherty in NEW YORK)