Several private equity investors are studying the possibility of making a bid for Compuware, setting up a potential takeover battle for the business software maker less than a year after it spurned a $2.3bn offer from activist investor Elliott Management.
Funds, including Thoma Bravo and Vista Equity Partners, a San Francisco-based buyout firm, have approached Compuware about taking the company private, according to people familiar with the discussions. Other prospective buyers have looked at Compuware, which is being advised by Goldman Sachs, and were at different stages of negotiations, these people said.
Any offer is likely to be priced at a premium to Compuware’s $2.34bn market capitalisation. A deal could be agreed by early January but the process was described as “fluid” and potential suitors could ultimately decide not to bid.
A sale of the Detroit-based software group would represent a long-awaited “liquidity event” for Elliott, which, with 8.6 per cent of the stock, has been Compuware’s largest shareholder since its abortive takeover attempt at the end of last year. Elliott could sell its stake or roll it over into a newly privatised company.
In the wake of Elliott’s efforts to take control of Compuware, the company’s board announced plans to cut costs, implement a special dividend and float its cloud-computing division, Covisint.
It also appointed Goldman Sachs to undertake a review of its options and has, according to people familiar with the matter, been exploring the idea of a sale for some months.
The prospect of a sale has enticed a host of hedge funds, including Jana and Starboard, into Compuware’s stock, which has risen 23 per cent in the past year.
Private equity buyers have been interested in buying Compuware for some time, but waited to see if newly private equity-owned rival BMC would make a bid before moving in with offers of their own.
BMC was taken private by Bain Capital and Golden Gate Capital in a $6.9bn deal this May and, thus far, has shown little interest in making a bid for Compuware.
At the time of its offer for the company last December, Elliott asserted that Compuware had underperformed against the Nasdaq Composite and S&P 500. It said it believed in the value of the company’s assets but that “its execution, profitability and growth have meaningfully underperformed”.
Elliott was founded by Paul Singer, who grew it into an aggressive activist over decades, and made himself a billionaire in the process. The hedge fund has not yet committed to a full exit from Compuware, should a sale go ahead.
Compuware’s shares closed at $10.82 on Tuesday.
Compuware, Thoma Bravo and Vista all declined to comment. A spokesperson for Elliott declined to comment.