Compuware in $2.5 Billion Private Equity Buyout

IT solutions provider Compuware (CPWR), under pressure from activist investor Elliott Management, has been acquired by private equity firm Thoma Bravo in a stock and cash deal valued $2.5 billion that will take the company private immediately.

The Detroit-based technology provider, which in December 2012 rebuffed an Elliott $2.3 billion buyout offer, received a slightly higher overall price from Thoma Bravo. Elliott owns 9.5 percent of Compuware.

Under the terms of the transaction, existing Compuware shareholders will receive an aggregate of $10.92 per share, including cash and stock from the spinoff of subsidiary Covisint, amounting to a 17 percent premium above the company’s issue price at the close of trading on Friday, Aug. 29.

"We have been incredibly impressed with the business that the Compuware management team has built, and look forward to working with them on this next stage of growth for the company," said Seth Boro, a Thoma Bravo managing partner. "The APM and Mainframe Productivity Tools markets are exciting and ever-evolving industries, and we're confident that our partnership with Compuware will enhance its position as the market leader and fuel further innovation that will benefit customers."

Compuware said its board of directors had unanimously approved the deal. The transaction, which is expected to close by early 2015, is subject to approval from Compuware's shareholders, regulatory approvals and other customary closing conditions. At closing, Thoma Bravo will acquire 100 percent of Compuware's outstanding shares and Compuware will become a privately held company.

Elliott has agreed to vote its shares in favor of the transaction, the companies said.

"This is the right transaction for Compuware at the right time, and reflects a thorough Board review of strategic alternatives and the work of a committee established earlier this year to focus on value-generating steps,” said Gurminder S. Bedi, Compuware’s independent board chairman. “This agreement provides shareholders with immediate and substantial cash value, a significant premium to our share price, and the ability to complete the Covisint spinoff to shareholders. Thoma Bravo is an ideal partner for Compuware, adding significant application software, services, and financial expertise."

In late July, Compuware reported sales Q1 FY 2015 sales of $164.5 million, a 3.7 year-over-year decline in which key areas such as software license fees, subscriptions and application services fees fell by significant amounts. The company reported Q1 GAAP net income of $52,000, or 0 cents per diluted share, compared to $4.3 million, or 2 cents per diluted share in the year-ago period.

At the time, Compuware chief Bob Paul said the company’s “strategic- and shareholder-value initiatives remain on track with the Board remaining committed to reviewing and evaluating credible opportunities to create additional value for shareholders."