Hedge fund will review Compuware's finances before considering another bid [Detroit Free Press]
(Detroit Free Press (MI) Via Acquire Media NewsEdge) Feb. 19--The New York hedge fund that unsuccessfully bid to take over Compuware has agreed to not rebid for the Detroit-based business software company until at least May 15 while it scrutinizes the firm's financials.
Elliott Management, known as an activist investor in underperforming tech companies, agreed to the "standstill" pact as part of a newly finalized nondisclosure agreement with Compuware.
The confidentially agreement bars the hedge fund from revealing any nonpublic information that it picks up during a forthcoming look at Compuware's books. And the standstill pact prohibits the hedge fund from making new offers or buying more than 9.9% of Compuware stock before mid-May.
Representatives for both Compuware and Elliott Management on Tuesday characterized the arrangement as a common procedure and declined further comment.
The company's shares opened at $11.76 today and quickly rose to a nearly three-year high of $12.12 on news of the arrangement's disclosure. The stock was $11.85 shortly after 1 p.m.
Compuware's board of directors announced Jan. 25 that it had rejected the hedge fund's unsolicited $2.3 billion, $11-per-share takeover bid because it was too low and undervalued the company.
But board members left a door open to accepting a better offer in the future, agreeing to let Elliott Management take a behind-the-scenes tour of Compuware for due diligence. The hedge fund indicated that it might continue its takeover efforts later on, depending on what it sees.
Elliott Management increased its holdings this month in Compuware to 8.7% of the company's stock from 8.3%, according to corporate filings. The hedge fund has become Compuware's second biggest shareholder behind the Dodge & Cox mutual fund.
In addition to rejecting Elliott Management's bid, Compuware's board last month said it will soon move forward with a three-year, $60-million cost-reduction program and initiate the company's first-ever dividend to shareholders. Compuware has yet to disclose whether the reductions will include layoffs.
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