Elliott Offers to Acquire Compuware for $2.3 Billion

Elliott Management President Paul Singer
Elliott Management Corp. President Paul Singer. Photographer: Jacob Kepler/Bloomberg

Elliott Management Corp., the activist investor that owns 8 percent of Compuware Corp., offered to buy the Detroit-based software company for $2.3 billion, saying it has “underperformed.”

The bid of $11 a share is a 15 percent premium over the company’s closing price of $9.53 on Dec. 14. Elliott, the $20 billion New York-based hedge fund founded by billionaire Paul Singer, said it is “confident” that it can obtain financing for the deal, according to a statement today.

In a letter to Compuware today, Elliott said the software company’s “execution, profitability and growth have meaningfully underperformed.” Elliott said it’s prepared to meet with Compuware immediately to discuss a transaction.

Compuware, which provides infrastructure software, rose 13 percent to $10.76 today in New York, the biggest jump in more than four years. The stock has climbed 29 percent in 2012.

The company’s board “will review all aspects of the proposal in consultation with its financial and legal advisers in due course,” according to a statement today.

Elliott reported a 5.7 percent stake in Compuware in a 13D filing on Nov. 26, gaining an opening to agitate for change at the company.

Elliott made an unsolicited $2 billion offer for Novell Inc. in 2010 after building an 8.5 percent stake in the Linux software maker. Novell was bought last year by Attachmate Corp. for $2.2 billion.

Elliott’s Investments

More recently, Elliott pressed BMC Software Inc. for several months to consider a sale, resulting in a $1 billion share buyback announced Oct. 31. The activist investor amassed a stake in Brocade Communications Systems Inc. as of August 2011, and a year later Chief Executive Officer Michael Klayko said he would step down after trying to sell the company for more than two years.

Sales at Compuware are projected to fall about 2.7 percent to $982.1 million in 2013, according to data compiled by Bloomberg. The company’s products include mainframe applications, collaboration technology, project management tools, and application performance management services for cloud and mobile applications.

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