NEW YORK (AP) - Compuware shares jumped 17 percent Monday, after Elliott Management offered to buy the software development company for about $2.35 billion.
The New York-based investment firm wants to acquire Compuware Corp. for $11 per share. The offer represents a 15 percent premium over its Friday closing stock price.
Elliott currently holds an 8 percent stake in Compuware. It said that while the Detroit-based company has strong assets, its profitability and growth have significantly lagged in recent years.
Elliott said it's confident that it can find financing for such a deal and wants to meet with the company's board as soon as possible.
Later on Monday, Compuware released a statement saying that it received the offer and would review it with its financial and legal advisers.
The offer comes about a month after Compuware founder Peter Karmanos Jr. announced plans to step down as executive chairman next year. He stepped down as CEO in 2011.
In addition, Compuware said Friday that it that it filed for a possible initial public offering of its Covisint Corp. unit and could conduct the IPO in three to six months.
The company said the IPO would give Covisint more flexibility to pursue strategic opportunities and increase its visibility. Covisint specializes in secure, industry specific communication and collaboration, according to its website.
Compuware has struggled amid sluggish global economic conditions and the European economic crisis. In October, it said its fiscal second-quarter profit plunged 53 percent and issued a weak forecast for the full year. But despite significant volatility, the company's shares have risen about 15 percent since the beginning of the year.
In afternoon trading, Compuware shares rose $1.26, or 13 percent, to $10.78, after peaking at $11.16 earlier in the day, passing their previous 52-week high of $10.25 and marking their highest price since May 2011.
Read the offer letter from Elliott Management:
Dear Members of the Board of Directors:
I write to you on behalf of Elliott Management Corp. and its funds Elliott Associates, L.P. and Elliott International L.P. (collectively, “Elliott”) which collectively own, or have an interest economically equivalent to, 8.0% of the common stock of Compuware Corporation (“Compuware”), making Elliott one of the Company’s largest stockholders. Elliott is a multi-strategy investment firm with over $20 billion in assets under management focused on employing detailed research to address complex investment situations. We have considerable experience in the technology sector involving both public and private investments.
Based on our detailed review of the Company’s publicly available information and our substantial knowledge of the software industry, we are pleased to submit this proposal to acquire all of the shares of common stock of Compuware for a price of $11.00 per share. Our offer represents a premium of 25% over the Company’s unaffected market value as of the date Elliott filed its Schedule 13D last month. This price also represents a 21% premium over the Company’s 30-day volume-weighted average price (“VWAP”), a 24% premium over the Company’s 60-day VWAP and a 24% premium over the Company’s one-year VWAP. Finally, this price represents a premium of 15% over the Company’s current market value which we believe is substantially inflated as a result of Elliott’s 13D, a filing to which the Company has repeatedly drawn attention in public and private settings. Substantiating this belief is the fact that since November 26 th when we filed our 13D (just 3 weeks ago), Compuware’s stock price has outperformed the NASDAQ by 9 percentage points and the S&P 500 by 8 percentage points. By any measure, we believe our proposal represents a compelling opportunity that your stockholders will find extremely attractive.
Compuware is a long-established company that we have followed closely for several years. 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, Compuware’s stock has underperformed the Nasdaq and S&P 500 by an average of 6 and 34 percentage points over the last one and two years, respectively.
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. Elliott has over 35 years of experience in investing in public and private companies and an extensive track record of successfully structuring and executing acquisitions in the technology space. Our proposal is of course subject to a confirmatory due diligence review of the Company as well as the availability of reasonable financing. We are available to sign an appropriate confidentiality agreement and commence due diligence immediately. We are also confident we can obtain financing and have already had conversations with financing