In a letter sent to Compuware's board of directors, Elliott Management unveiled the $11 a share offer and highlighted that its bid represents a 25% premium to Compuware's shares prior November, when the sometimes activist fund disclosed an 8% stake in the company.
Jesse Cohn, a manager of Elliott's tech portfolio, noted in the letter the fund's experience in tech sector investments and its ability to find financing for the prospective takeover. Still, the offer is not legally binding, and Cohn said the $11 a share price is subject to Elliott's ability to conduct due diligence.
"We are prepared to meet immediately with you and your advisors in order to answer any questions about our proposal and to work out the details for moving toward a definitive transaction agreement," wrote Cohn, in the letter.It's too be seen whether Compuware rebuffs Elliott Management's takeover entreaties or whether the hedge fund's 8% stake will turn hostile. While the move is a rare buyout offer for the hedge fund, which previously made a similar sized bid for software specialist Novell in 2010, it adds to an increasing list of bets in struggling tech sector stocks. Earlier in 2012, Elliott Management advised BMC Software (BMC) to consider selling itself after taking a large activist stake in the networking and cloud software player. BMC Software rejected many of Elliott's management but this fall, the company said it had hired investment banks to field buyout offers. The hedge fund also has made activist investments in tech giants like Iron Mountain (IRM - Get Report) and its bid on now private Epicor. Novell, which rebuffed Elliott's takeover offers was eventually sold to privately-held Attachmate. The hedge fund also has benefited from a recovery in Brocade (BRCD - Get Report) after it took an 8% non-activist investment in networking equipment specialist in mid-2011, as the company's shares and earnings plummeted. Compuware shares surged over 14% in late Monday morning trading to $10.90. The company's share gains now stand in excess of 25% for 2012, after gaining roughly that amount in the past month. BMC Software shares have only posted mixed performance since Elliott Management began publicly advocating for the company's sale in May. For more on Elliott Management, see why its BMC Software bet was caught amid a cloud boom & tech sector gloom. Follow @agara2004 -- Written by Antoine Gara in New York