This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Compuware Outlines Value Creation Actions And Responds To Elliott Management Corporation’s Proposal

Compuware Corporation (Nasdaq:CPWR) today announced that its Board of Directors, after thorough analysis with its independent financial and legal advisors, completed its comprehensive review of the company’s alternatives and approved an action plan to realize the inherent value of Compuware for its shareholders. In connection with this analysis and review, the Board also unanimously concluded that Elliott Management Corporation’s proposal to acquire all of the outstanding shares of Compuware for $11.00 per share significantly undervalues the company and is not in the best interest of shareholders.

“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,” said Bob Paul, Chief Executive Officer. “Compuware has made significant progress positioning APM and Covisint for growth rates between 20% and 30%. We have also stabilized our Mainframe business and realigned our operating structure. Today’s actions, including the spin-off of Covisint, will sharpen our focus and reduce costs, delivering greater profitability and meaningful value for shareholders. Our decision to initiate a dividend of $.50 per share is a clear signal that our businesses are strengthening and underscores our confidence in the value that will be created by our actions.”

Mr. Paul continued: “We believe that selling the company at $11.00 per share does not take into account our progress returning the business to profitable growth and our future prospects. We are confident our plan will accelerate our progress and provide significant, near-term returns as well as future upside to our shareholders. While we are focused on executing and delivering on our plan, the Board will carefully review and evaluate any credible offer it receives, including from Elliott, that delivers full value to its shareholders.”

The Compuware actions include:

  • Launching a 3-year cost reduction plan that will eliminate at least $60 million in G&A and non-core operational expenses from the company, with a minimum of $20 million realized in FY 2014. The company expects that additional opportunities to rationalize and reduce costs and focus its business will be available as it continues to execute the plan.
  • Executing a spin-off of Covisint to Compuware shareholders following the initial public offering, to fully unlock the value of this business. In December, Compuware submitted a registration statement for Covisint Corporation to the U.S. Securities and Exchange Commission for a possible initial public offering of approximately 20% of its Class A common stock. The company expects that within 12 months of completing the IPO it will be distributing the remaining Covisint shares directly to Compuware shareholders, enabling shareholders to participate fully and directly in Covisint’s future and favorable prospects.
  • Implementing a plan to return capital to shareholders through an annual dividend of $.50 per share, at a yield greater than 4.5% based on Compuware’s current stock price, payable quarterly starting next quarter. The dividend is a strong indication of the momentum of the company’s strategy, the strength of its balance sheet, and the Board’s ongoing commitment to disciplined capital allocation as an important means of delivering value to shareholders.

We believe the execution of this plan will drive the growth of our key businesses, improve our margins and unlock the substantial value inherent in our company,” concluded Mr. Paul.

Goldman, Sachs & Co. and Allen & Company are serving as financial advisors, and Skadden, Arps, Slate, Meagher and Flom LLP is serving as legal counsel to Compuware.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs