Elliott Management Corp., a New York-based hedge fund, wants to buy Compuware (News - Alert) for $2.3 billion. That represents a deal valued at $11 a share. The offer is 15 percent over Compuware's closing price of $9.53 on Friday.
“Compuware is a long-established company that we have followed closely for several years,” Elliott portfolio manager Jesse Cohn said in a letter sent to the Compuware board. Elliott Management holds eight percent of Compuware's stock.
“We believe in the quality of Compuware's assets. However, its execution, profitability and growth have meaningfully underperformed. Prior to the filing of our 13D [on Nov. 26], Compuware’s stock has underperformed the Nasdaq and S&P 500 by an average of six and 34 percentage points over the last one and two years, respectively,” the letter said.
Since Nov. 26, Compuware’s stock price outperformed the NASDAQ by nine percentage points and the S&P 500 by eight percentage points.
“As a result of Elliott’s significant experience in the software sector and our deep public diligence into Compuware, we believe Elliott is uniquely situated to deliver maximum value to the Company’s stockholders,” the letter added. “By any measure, we believe our proposal represents a compelling opportunity that your stockholders will find extremely attractive.”
As a result of the news, Compuware's stock price increased some 14.2 percent in Monday morning trading. The news also comes after reports that Compuware's founder Peter Karmanos Jr., will retire as executive chairman in March. Also, the company’s Covisint subsidiary is preparing for an IPO.
Compuware provides software and related services. Its products are used at 46 of the companies listed on the top of the Fortune 500 and 12 of the 20 most visited U.S. websites, according to TMCnet.
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