Compuware Corp. will go private in a $2.5 billion deal with private equity firm Thoma Bravo, the pair said Tuesday, wrapping up a lengthy search for a buyer jump-started by activist investors urging the company to consider a sale.
The agreement is a long-awaited win for Elliott Management Corp., the New York-based activist fund that became Compuware's biggest shareholder in 2012. After the tech firm rebuffed a $2.3 billion offer from Elliott, the fund began needling for a sale to a different buyer, a chorus joined by other activists including Starboard Value LP and Sandell Asset Management Corp.
Compuware had insisted it wanted to remain independent, but Tuesday's transaction will take the company in a new direction.
Elliott said it would vote its 9.5 percent Compuware stake behind the Thoma Bravo bid that clocks in at $10.92 per share, slightly less than its ill-fated bid. Still, the consideration represents a healthy 17 percent premium over the company's trading prices last week and comes after a series of other plays, some activist-driven, meant to bolster shareholder value.
Over the past two years, Compuware has hived off several slow-going assets and took steps to drive up investor returns. It earned praise for spinning out cloud-based unit Covisint in an initial public offering, and embracing a board overhaul.
The Thoma Bravo sale is an extension of those efforts, Compuware CEO Bob Paul said in a statement.
"We began with the IPO of Covisint, initiated a robust divident, divested noncore operations and aggressively reduced corporate expenses," he said. "Compuware is now best suited to focus on its core mainframe and APM businesses as a private equity-backed company, where we can continue to serve our customers in a competitive environment with greater flexibility to take a long-term approach."
Compuware joins a growing collection of software companies in Thoma Bravo's portfolio, including Deltek and Attachmate Corp. As with its other investments, the investment firm will use its reserves and industry expertise to spur new growth, it said.
"Becoming a private company will enable this established market leader to leverage strategic product and other growth opportunities that will take Compuware to the next level," Thoma Bravo managing partner Orlando Bravo said in a statement.
Elliott's Jesse Cohn also lauded the move and Compuware's "significant endeavor" over the past two years to increase shareholder value and jockey for a better position in the marketplace. The long-running process also gave Elliott a boost, building up its reputation as a savvy tech investor.
Beyond Compuware, the hedge fund has helped push other tech companies, including BMC Software Inc. and Novell Inc., into multibillion-dollar sales. It's trying to recreate that success with Riverbed Technology Inc., a company that earlier this year rejected Elliott's own $3 billion bid, and with Juniper Networks Inc.
The Compuware sale is expected to close by early next year. Jefferies LLC, Credit Suisse Group AG and Deutsche Bank AG have agreed to provide debt financing for the transaction.
Compuware is represented by a team from Skadden Arps Slate Meagher & Flom LLP including Stephen Arcano, Richard Grossman, Stuart Finkelstein, Neil Leff, Thomas Hughes, Justin Herridge and Daniel Goldmintz.
Thoma Bravo is represented by Kirkland & Ellis LLP attorneys led by Gerald Nowak, Theodore Peto and Bradley Reed, along with Francesco Penati, Seth Traxler and David Kung.
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