As a part of
earlier announced restructuring initiatives, the company's fully
owned subsidiary Covisint Corp recently filed an S-1 statement
with the Securities and Exchange Commission ("SEC").
Covisint proposes to issue shares of its common stock, which
is expected to give the company greater flexibility in pursuing
strategic growth opportunities going forward.
Credit Suisse Group's (
U.S. division, Credit Suisse Securities LLC will act as lead
book-running manager, while Pacific Crest Securities LLC will act
as joint book-running manager for the offering.
However, Covisint is yet to finalize the number of shares for
the Initial Public Offering ("IPO") and also the price range.
Earlier, Compuware had announced that Covisint will offer
approximately 20% of Class A stock in the IPO. Compuware is
expected to distribute its remaining shares in Covisint Corp
directly to shareholders after the completion of the proposed
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 Elliott, 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.
Covisint's S-1 filing suggests that Compuware is steadily
progressing with its restructuring initiatives that include steps
to increase shareholder value and profitability through stringent
cost control measures.
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. Compuware also
announced that it will initiate a dividend payout of 50 cents per
share beginning in the first quarter of fiscal 2014. On May 16,
2013, Compuware declared its first dividend of 12.5 cents to be
paid on Jun 19, 2013.
Although a better buyout offer will be positive for investors,
we believe that the prevailing sluggish macroeconomic conditions
will likely act as an impediment toward fetching a higher
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
CA Technologies (
International Business Machines (
However, Compuware reported a tepid fourth quarter due to
lower number of deals closed in the Application Performance
Management (APM) and Mainframe businesses. Moreover, execution
challenges (related to acquisition, geography and people) are
possible headwinds going forward.
Currently, Compuware has a Zacks Rank #4 (Sell).
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