Compuware To Be Taken Private By Thoma Bravo In $2.5 Bln Deal

(RTTNews) - Software developer Compuware Corp. (CPWR) has agreed to be acquired by private equity firm Thoma Bravo LLC in a transaction valued at about $2.5 billion, the two companies said Tuesday.

At closing, Thoma Bravo will acquire all the outstanding shares of Detroit-based Compuware and Compuware will become a privately-held company. Compuware will immediately discontinue its quarterly cash dividend.

Under the terms of the deal, Compuware shareholders will receive about $10.92 per share, representing a 16.8 percent premium to the company's closing stock price of $9.35 per share on Friday, August 29, 2014.

The transaction is expected to close by early 2015 and is subject to the completion of the disposition of Compuware's subsidiary Covisint Corp. (COVS), a cloud engagement platform provider.

Thoma Bravo will pay a cash purchase price of $10.43 per share, less the pro-rata portion of the applicable corporate tax that will be owed in connection with the spin-off of Covisint. This is currently estimated at $0.18 per share based on the current market price of Covisint, resulting in a net cash payment by Thoma Bravo of about $10.25 per share.

The parties have agreed that within 60 days following the date of the merger agreement, Compuware will effectuate the pro-rata distribution to its shareholders of the remaining shares of Covisint owned by Compuware.

This will result in a distribution of Covisint shares representing about $0.67 per share of Compuware common stock, based on the closing price of Covisint on Friday, August 29.

Compuware's board of directors has unanimously approved the agreement and recommended that Compuware's shareholders approve the transaction.

Bob Paul, chief executive officer of Compuware said, "Compuware is now best suited to focus on its core mainframe and APM businesses as a private-equity backed company, where we can continue to serve our customers in a competitive environment with greater flexibility to take a long-term approach."

Seth Boro, a managing partner at Thoma Bravo, said, "The APM and Mainframe Productivity Tools markets are exciting and ever-evolving industries, and we're confident that our partnership with Compuware will enhance its position as the market leader and fuel further innovation that will benefit customers."

Activist hedge fund Elliott Management, which owns about 9.5 percent of Compuware's common stock, has entered into an agreement with Thoma Bravo to vote its shares in favor of the transaction.

Elliot Management, Compuware's largest shareholder, said it believes the deal is in the best interest of Compuware's shareholders.

In 2012, Elliott Management made an unsolicited $11 per share offer that valued Compuware at about $2.4 billion. Compuware later launched a sales process for itself.

Compuware was founded in 1973 and has clients at more than 7,100 companies.

Compuware noted that there is no financing condition associated with the proposed acquisition. Jefferies, Credit Suisse and Deutsche Bank have agreed to provide debt financing in connection with the transaction.

Goldman, Sachs & Co. is serving as financial advisor, and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel to Compuware. Kirkland & Ellis LLP is serving as legal counsel to Thoma Bravo.

CPWR is currently trading at $10.52, up $1.17 or 12.57 percent on a volume of 14.09 million shares.