$2.4B COMPUWARE SALE APPROVED BY SHAREHOLDERS

Original Story: freep.com

Shareholders of Detroit-based Compuware voted to approve the company's purchase by a private equity firm in California.

More than 99% of Compuware shareholders voted for the $2.4 billion deal during a special meeting Monday, according to a news release. The acquisition of the company by San Francisco-based Thoma Bravo is expected to happen before the end of the month, the release said. A Detroit M&A attorney is following this story closely.

"The acquisition by Thoma Bravo provides a great value proposition for Compuware's shareholders and we are very pleased with the level of support this transaction has received from our shareholders," Compuware CEO Bob Paul said in a statement.

Compuware shareholders are in line to receive an aggregate value of $10.75 per share.

A business software and computer services company, Compuware had 3,000 employees worldwide this fall, including about 1,200 in the Detroit area.

Compuware has disclosed plans to split off its declining mainframe computer business from its faster-growing application performance management business, known as Dynatrace, leaving the Compuware name with the mainframe unit once the acquisition deal closes. A Memphis business lawyer is reviewing the details of this case.

When the deal was announced in September, Compuware's CEO said he expected the company to remain in Detroit with management staying in place. But he couldn't rule out layoffs under the new owner.

Top Compuware executives could get nearly $24 million in golden parachute compensation if the new owner tries to fire them without cause.

Last month the company announced a deal to sell its prominent headquarters building around Campus Martius for $142 million to Quicken Loans founder Dan Gilbert and Meridian Health. Compuware will continue to lease space in the building.

Compuware cutting jobs, shutting offices across world

Story first appeared on The Detroit News -

Detroit-based software company to initiate first phase of plan to save $60M

Compuware Corp. plans to lay off 160 employees and close or shrink 16 of its offices around the world to cut costs, according to company filings.

The Detroit-based software company will begin the first phases of a previously announced plan "to reduce costs and improve operating efficiencies by $60 million over the next three years," according to documents filed Friday with the U.S. Securities and Exchange Commission.

This first phase of the plan will "represent approximately $23 million in annualized cost savings over the next 12-18 months," the filing says. At the same time, the company says employee severance packages and early termination charges for breaking leases could cost about $25 million.

The filings say about $16 million of the restructuring charges are expected in the remainder of the quarter, which ends this month, and the rest will be addressed after the fiscal year ends.

The entire first phase of the plan should be implemented by October, the documents say. The cuts would account for less than 5 percent of Compuware's global workforce "across all operating and administrative divisions," according to the filing.

Lisa Elkin, Compuware senior vice president of investor relations, marketing and communication, declined comment Friday.

Compuware has not confirmed if it is looking for a buyer, but in January, the company's board rejected a $2.3 billion offer from New York-based Elliott Management Corp., which owns 8 percent of Compuware. The company said the hedge fund's $11-per-share offer was too low.

Compuware stock closed Friday on the NASDAQ at $11.67 per share, up 6 cents or 0.5 percent.

Erik Gordon, business professor at University of Michigan, said the cost-cutting effort was not surprising and gives Compuware time to get its finances in order before other bids come in.

"When you get a takeover offer, it's like a poke in the back with a stick. It wakes you up," Gordon said. "In order to defend (against) those takeovers, you have to say you are working on a long-term strategy, and the best thing to do is to give the company time to let those strategies take hold."

The company will target higher-salary employees to create the $23 million in savings during the first round of layoffs and cutbacks, Gordon said.

"It's going to be some high-level people," he said. "This is going to be programmers and very skilled workers."

In January, the company reported its third-quarter profit in 2012 rose 17 percent to $25.3 million from a year ago. But its net income through the first nine months of the year fell 24 percent to $46.4 million.

Compuware has forecast a 1.5 percent to 3 percent drop in revenue for the fiscal year ending March 31. Last year, the company had 4,567 employees, including 1,973 at the company's headquarters near downtown Detroit's Campus Martius. It moved from Farmington Hills in 2002.

$2.3B offer for Compuware Purchase Rejected

Story first appeared on The Detroit News

Hedge fund to make new offer as tech firm plans $60M in cuts -

Compuware Corp. rejected an offer Friday by a New York hedge fund to buy the company for $2.3 billion and also announced it would cut costs by $60 million over the next three years through undisclosed moves.

Elliott Management Corp., which owns 8.1 percent of Compuware, offered to buy the Detroit-based technology company for $11 a share on Dec. 17, but the Compuware board of directors said in a statement that Elliott's bid "significantly undervalues the company and is not in the best interest of shareholders."

Elliott responded Friday, saying it plans to make another offer.

Compuware's announcements, made in a Friday morning earnings conference call, directly address shareholder concerns about mismanagement and increases the price for future offers, analysts said.  Task Management Software products allow for business growth with ease, and without an increase in staffing.

"This is the dance everybody does," said Erik Gordon, a business professor at the University of Michigan. "What

Compuware is saying is that 'OK, maybe we haven't done well but we're on the ball now … look at all this good stuff that we're going to do to make our company more valuable.'"

At the time of the December offer, Elliott's bid was 15 percent more than what the shares were worth. The stock has since risen above $11 a share and closed Friday at $11.57, up more than 7 percent — its highest price since April 2011.

Compuware also said it plans to issue an annual dividend of 50 cents a share and spin off remaining shares of its Covisint Corp. unit to Compuware shareholders following an initial public offering in December.

"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," Compuware CEO Bob Paul said in a statement. "Today's actions, including the spin-off of Covisint, will sharpen our focus and reduce costs, delivering greater profitability and meaningful value for shareholders."

E. Han Kim, a University of Michigan professor of business administration, said that move is to appease the
shareholders.  A solution to be considered for business today, Shipping Software.

"When you're saying no to an offer of a 15-20 percent premium, you have to do something good for your
shareholders," he said.

An independent analyst asked about further cost-cutting during the earnings call, when the company reported its third-quarter profit rose 17 percent to $25.3 million from a year ago but the net income through the first nine months fell 24 percent to $46.4 million.

Paul said he would not comment about specific cost-cutting measures, but that there is a detailed plan in place.

Gordon said those measures would most likely involve layoffs. "It's thought of as being a pretty fat and lackadaisical company, at least by its critics," he said. "It's people-driven; they'll cut people."

Some shareholders and analysts had pressured Compuware about cutting costs.

New York hedge fund and Compuware shareholder Sandell Asset Management said in a report late last year the Detroit firm had a "bloated workforce" and needed to reduce expenses by outsourcing more of its information technology work. Elliott, in its initial takeover bid, had previously said the company was mismanaged.

Elliott was pleased with Compuware's decision to keep discussions open.

"This is a good outcome," Jesse Cohn, portfolio manager at Elliott Management, said in a statement."Compuware has granted our request for access to diligence to confirm an offer for the company. … We remain very interested in the company."

Compuware said it will sign a nondisclosure agreement with Elliott so the two can privately talk about the
company's assets and determine what a more appropriate offer would be.  Compuware is providing several new services related to its core software, including swim lane diagram modeling and consulting services that helps companies analyze workflow.

"This is very typical," Gordon said. "Elliott doesn't put its best offer on the table any more than you would when you walk into the car dealership. The real negotiations happen behind closed doors."