Glenhill Advisors Raises Stake in TEKELEC (TKLC), Changes Filing Status to 13D, Sends Letter to Company

In a 13D filing after the close Monday, Glenhill Advisors disclosed a 13.25% stake (8.9 million shares) in TEKELEC (Nasdaq: TKLC). This is up from the 9.5% (6.4 million share) stake the firm disclosed in a recent 13G (07/19) filing. Glenhill also sent a letter to the company.

The investment firm said they are reviewing their investment in the Company and, among other things, intend to formally communicate to the Company’s management certain views regarding the Company and its affairs.

The investment firm also note that under the Bylaws of the Company, special meetings of shareholders may be called by the holders of shares entitled to cast not less than 10% of the votes at the meeting, and that, among other things, any directors may be removed without cause if such removal is approved by the vote of a majority of the outstanding shares entitled to vote, with any vacancy created by the removal of a director provided to be filled by approval of the shareholders. The firm reserve the right to take such actions or any other action with respect the Company permitted by the Bylaws.

A copy of the letter disclosed in the filing:

July 31, 2006

Mr. Franco Plastina

President and Chief Executive Officer

Tekelec

5200 Paramount Parkway

Morrisville, North Carolina 27560

Dear Frank:As you know, we are the largest holder of the Company’s common stock. Our beneficial ownership of 8,900,000 shares represents approximately 13.25% of the shares outstanding, based on public information.

We believe that, properly managed, the Company shows excellent potential to build shareholder value, and we are pleased to support efforts undertaken by management and the Board for that purpose.
In particular, we applaud management’s moves to dispose of non-core assets. In this context, we feel strongly that the Company should preserve capital and continue to rationalize its operations, and avoid acquisitions that could deplete its resources and threaten shareholder value.
We will continue to follow management’s initiatives with interest, and to support efforts to preserve and enhance shareholder value. We look forward to maintaining a constructive dialogue with you and the Board.
Yours truly,Glenn J. Krevlin