Compuware Outlines Value Creation Actions and Responds to Elliott Management
*Launches 3-Year Cost-Reduction Program of At Least $60 Million, with
Minimum of $20 Million in FY 2014 Savings
*Announces Intent to Spin-Off Remaining Covisint Shares to Compuware
Shareholders Following IPO
*Board Approves Plan to Return Capital to Shareholders through Annual
Dividend of $.50 Per Share Beginning in Q1 FY 2014
DETROIT -- January 25, 2013
Compuware Corporation (Nasdaq:CPWR) today announced that its Board of
Directors, after thorough analysis with its independent financial and legal
advisors, completed its comprehensive review of the company’s alternatives and
approved an action plan to realize the inherent value of Compuware for its
shareholders. In connection with this analysis and review, the Board also
unanimously concluded that Elliott Management Corporation’s proposal to
acquire all of the outstanding shares of Compuware for $11.00 per share
significantly undervalues the company and is not in the best interest of
“We are committed to creating value for shareholders and the actions announced
today are focused on increasing profitability, building on the momentum of our
transition to higher-growth businesses, and returning capital directly to
shareholders,” said Bob Paul, Chief Executive Officer. “Compuware has made
significant progress positioning APM and Covisint for growth rates between 20%
and 30%. We have also stabilized our Mainframe business and realigned our
operating structure. Today’s actions, including the spin-off of Covisint, will
sharpen our focus and reduce costs, delivering greater profitability and
meaningful value for shareholders. Our decision to initiate a dividend of $.50
per share is a clear signal that our businesses are strengthening and
underscores our confidence in the value that will be created by our actions.”
Mr. Paul continued: “We believe that selling the company at $11.00 per share
does not take into account our progress returning the business to profitable
growth and our future prospects. We are confident our plan will accelerate our
progress and provide significant, near-term returns as well as future upside
to our shareholders. While we are focused on executing and delivering on our
plan, the Board will carefully review and evaluate any credible offer it
receives, including from Elliott, that delivers full value to its
The Compuware actions include:
*Launching a 3-year cost reduction plan that will eliminate at least $60
million in G&A and non-core operational expenses from the company, with a
minimum of $20 million realized in FY 2014. The company expects that
additional opportunities to rationalize and reduce costs and focus its
business will be available as it continues to execute the plan.
*Executing a spin-off of Covisint to Compuware shareholders following the
initial public offering, to fully unlock the value of this business. In
December, Compuware submitted a registration statement for Covisint
Corporation to the U.S. Securities and Exchange Commission for a possible
initial public offering of approximately 20% of its Class A common stock.
The company expects that within 12 months of completing the IPO it will be
distributing the remaining Covisint shares directly to Compuware
shareholders, enabling shareholders to participate fully and directly in
Covisint’s future and favorable prospects.
*Implementing a plan to return capital to shareholders through an annual
dividend of $.50 per share, at a yield greater than 4.5% based on
Compuware’s current stock price, payable quarterly starting next quarter.
The dividend is a strong indication of the momentum of the company’s
strategy, the strength of its balance sheet, and the Board’s ongoing
commitment to disciplined capital allocation as an important means of
delivering value to shareholders.
“We believe the execution of this plan will drive the growth of our key
businesses, improve our margins and unlock the substantial value inherent in
our company,” concluded Mr. Paul.
Goldman, Sachs & Co. and Allen & Company are serving as financial advisors,
and Skadden, Arps, Slate, Meagher and Flom LLP is serving as legal counsel to
Compuware Corporation, the technology performance company, provides software,
experts and best practices to ensure technology works well and delivers value.
Compuware solutions make the world's most important technologies perform at
their best for leading organizations worldwide, including 46 of the top 50
Fortune 500 companies and 12 of the top 20 most visited U.S. web sites. Learn
more at: http://www.compuware.com.
Conference Call Information
Compuware will host a conference call to discuss this announcement at 9:00
a.m. Eastern time today. To join the conference call, interested parties in
the United States should call 800-230-1096. For international access, the
conference call number is +1-612-288-0340. No password is required.
A conference call replay will also be available. The United States replay
number will be 800-475-6701, and the international replay number will be
+1-320-365-3844. The replay passcode will be 280486. Additionally, investors
can listen to the conference call via webcast by visiting the Compuware
Corporation Investor Relations web site at http://www.compuware.com.
Certain statements in this release that are not historical facts, including
those regarding the Company's future plans, objectives and expected
performance, are "forward-looking statements" within the meaning of the
federal securities laws. These forward-looking statements represent our
outlook only as of the date of this release. While we believe any
forward-looking statements we have made are reasonable, actual results could
differ materially since the statements are based on our current expectations
and are subject to risks and uncertainties. These risks and uncertainties are
discussed in the Company's reports filed with the Securities and Exchange
Commission. Readers are cautioned to consider these factors when relying on
such forward-looking information. The Company does not undertake, and
expressly disclaims any obligation, to update or alter its forward-looking
statements whether as a result of new information, future events or otherwise,
except as required by applicable law.
Lisa Elkin, +1-313-227-7345
Senior Vice President, Investor Relations, Marketing and Communications
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