Reportedly, private-equity firms Vista Equity Partners LLC and
Thoma Bravo LLC are pondering over the buyout of
). This is the second time in last 15 months that Compuware
attracted attention from prospective private-equity buyers.
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Although no talks between the parties have been reported,
according to Bloomberg the company's finances are being reviewed
by the duo. Compuware rejected a $3.2 billion bid from activist
investor Elliott Management Corp. in January last year.
Post the Elliott offer, Compuware reportedly solicited a number
of other private equity funds such as Blackstone Group LP, TPG
Capital LP and Golden Gate Capital for a possible buyout.
However, to date, nothing concrete has materialized from these
After rejecting Elliott's offer, Compuware announced a number of
initiatives that included cost cutting, divestiture of non-core
units, dividend payment and lastly the spin-off of its
cloud-based division Covisint into a separate publicly traded
On May 16, 2013, Compuware declared its first dividend of 12.5
cents as part of its restructuring program. Covisint started
trading as a separate company from Sep 2013. Compuware offered
approximately 18% of its stake in the IPO. The company is
expected to distribute its remaining shares directly to
shareholders within a year of the completion of the IPO.
Earlier this year, Compuware divested three strategic business
units - Changepoint, Professional Services and Uniface - which
will allow management to focus better on the core business,
thereby improving execution. Compuware's restructuring plan is
expected to save approximately $110.0-$120.0 million on an annual
basis over the next couple of years.
We believe Compuware's initiatives are positive for shareholders
over the long term. Compuware expects APM to grow 9.0% in 2014.
New program wins and introduction of new products will help
Compuware to counter strong competition from the likes of BMC
). This also makes the company attractive to private-equity
However, overdependence on
International Business Machines'
) technology may rationalize growth prospects to a certain
extent. Furthermore, the intensely competitive landscape remains
a major headwind.
Currently, Compuware has a Zacks Rank #3 (Hold).