A New York hedge fund has offered to acquire application performance management vendor Compuware for $2.3 billion.
"Compuware is a long-established company that we have followed closely for several years. We believe in the quality of Compuware’s assets," wrote Elliott Management in a letter to Compuware’s board of directors. "However, its execution, profitability and growth have meaningfully underperformed. Compuware’s stock has underperformed the Nasdaq and S&P 500 by an average of 6 and 34 percentage points over the last one and two years, respectively."
The firm, which already owns an 8% stake in Compuware, said it has "over 35 years of experience in investing in public and private companies and an extensive track record of successfully structuring and executing acquisitions in the technology space.
The $2.3 billion offer represents a 25% premium on Compuware’s market capitalisation before the offer was made.
Detroit-headquartered Compuware acknowledged the unsolicited bid and said it will "view all aspects of the proposal in consultation with its financial and legal advisors in due course".
In 2009, as growth stagnated, Compuware repositioned itself as an application performance management vendor. It sold its software testing division to the UK’s Micro Focus, and acquired web performance management supplier Gomez to help customers manage their web and cloud-hosted applications.
At the time, Ovum analyst Tony Baer remarked that the Gomez acquisition gave Compuware "a capability not matched by any of its rivals".
That strategy appeared to work for a while. In its 2012 financial year, ending 30 March 2012, revenues rose 9% year-on-year to just over $1 billion, its largest growth for over a decade.
Since then, though, growth has slipped back. In its most recent financial quarter, ending 30 September, Compuware’s revenue fell 15% year-on-year $220 million, as net income dropped 50% to $10.5 million.
"We did have some significant challenges in Europe," said CEO Robert Paul at the time. "We’re also challenged with a lacklustre mainframe market."