Updated from 11:22 a.m. EST
SAN FRANCISCO -- Software developer
caved into pressure from an activist hedge fund Tuesday in order to stave off a proxy fight.
The Dublin, Calif., maker of business software agreed to use its stockpile of cash to repurchase $300 million of its shares in a modified Dutch auction self-tender offer at prices between $28 and $30 a share before the company's annual meeting April 15.
The tender offer represents 11.6% of the company's market cap. It will be paid from cash on hand. At the end of 2007, the company had nearly $700 million in cash and equivalents, a significant portion of it abroad and subject to repatriation tax.
The company also agreed to make its best effort to complete the repurchase of an additional $83 million remaining in its buyback program before its 2009 shareholder meeting.
Sandell Asset Management, which owns 6% of Sybase's outstanding shares,
had pressured the company in October to boost its share buybacks, sell off its mobile software business or put the whole company up for sale.
After the company only marginally increased its share repurchases, Sandell threatened to name its own slate of nominees to the board. As part of the agreement, Sandell will abandon its intention to wage a proxy fight.
Sybase rose 65 cents, or 2.4%, to $27.93 in recent trading. In the weeks before Sandell's initial action, the stock had fallen to one-year lows and generally traded below $23.
In response to Sandell's threat, Sybase bought back $75.3 million worth of shares during the most recent quarter, about triple its quarterly rate for most of 2007. Cash flow from operations was $254 million last year.