) recently announced the pricing of the initial public offering
(IPO) of Covisint Corp, its wholly-owned subsidiary. The shares
begin trading today under the symbol COVS. Covisint Corp filed an
S-1 statement with the Securities and Exchange Commission (SEC)
in May this year.
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However, at that time Covisint did not specify the number of
shares for the IPO and also the price range. Currently Covisint
is offering 6.4 million shares for $10 per share, which
represents approximately 17.6% of its issued and outstanding
shares. Moreover, the underwriters have a 30-day option to
purchase up to an additional 960K shares at the IPO.
Credit Suisse Group
) U.S. division, Credit Suisse Securities LLC acted as lead
book-running manager, while Pacific Crest Securities LLC acted as
joint book-running manager for the offering. Evercore acted as a
In Jan 2013, Compuware rejected a $2.3 billion bid from activist
investor Elliott Management, stating that the $11.00 per share
offer was inadequate. Post the Elliott offer, Compuware had
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 discussions.
As a part of Compuware's restructuring initiatives, Covisint's
IPO is expected to give it greater flexibility in pursuing
strategic growth opportunities. Compuware intends to offer
approximately 20% of Covisint's Class A stock in the IPO and will
distribute its remaining shares directly to shareholders after
the completion of the IPO.
Compuware's 3-year restructuring plan is expected to save
approximately $60.0 million. For fiscal 2014, the plan is
expected to save a minimum of $20 million. On May 16, 2013,
Compuware declared its first dividend of 12.5 cents that was paid
on Jun 19, 2013, as a part of its restructuring program.
We believe that Compuware's restructuring initiatives are
positive for shareholders over the long term. The company's
strong product portfolio, new program wins and innovative product
portfolio will help it to counter strong competition from the
International Business Machines
) going forward.
However, execution challenges (related to acquisition, geography
and people) are major headwinds going forward.
Currently, Compuware has a Zacks Rank #3 (Hold).