Compuware Inks $2.5B Buyout Agreement with Thoma Bravo

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Compuware Corporation (NASDAQ:CPWR) signed a definitive agreement to be acquired by private equity investment firm, Thoma Bravo, LLC for approximately $2.5 billion amid pressure from Elliott Management.

Terms of the deal

Under the terms of the agreement, the shareholders of Compuware Corporation (NASDAQ:CPWR) will receive an aggregate value of $10.92 per share, which represents approximately 17% premium to the closing price of the stock on August 29.

According to Compuware Corporation (NASDAQ:CPWR), Thomas Bravo will pay $10.43 in cash for each of its outstanding shares, less the pro rata portion of the applicable corporate tax that will be owed related to the spin-off of Covisint.

The company estimated that pro rata portion of applicable corporate tax is around $0.18 per share based in the current market price of Covisint. As a result, the net cash payment for Compuware’s stock is $10.25 per share.

Compuware Corporation (NASDAQ:CPWR) and Thoma Bravo agreed to distribute the pro rata payment to shareholders of the remaining shares of Covisint owned by the company within 60 days following the date of the merger agreement.

According to Compuware Corporation (NASDAQ:CPWR), its will distribute $0.67 per share of Compuware stock based on the closing price of Covisint on August 29.

“During the 60-day period, Compuware may seek a higher value alternative for its Covisint shares, in which case the proceeds, net of tax and certain charges, of such disposition will be paid to Compuware shareholders,” according to the company.

The board of directors of Compuware Corporation (NASDAQ:CPWR) unanimously approved the transaction, which is expected to close early 2015 subject to shareholders and regulatory approvals as well as other customary closing conditions.

Jefferies acted as the lead financial advisor and arranger of financing to Thoma Bravo in its $2.5 billion acquisition of Compuware Corporation.

Elliott approves Compuware’s deal

Compuware Corporation (NASDAQ:CPWR) said Elliott Management signed an agreement with Thoma Bravo to vote its shares in favor of the acquisition. Elliott owns 9.5% stake in the company.

The activist hedge fund previously offered to acquire Compuware for $2.3 billion, but it was rejected by the board of directors of company.

In a statement, Gurminder S. Bedi, independent chairman of the board of Compuware Corporation (NASDAQ:CPWR) said, “This is the right transaction for Compuware at the right time, and reflects a thorough board review of strategic alternatives and the work of a committee established earlier this year to focus on value-generating steps.”

Bedi emphasized that the agreement provides immediate and substantial cash value to shareholders. He added that the deal represents a significant premium to the company’s stock price, and provides the ability to complete the Covisint spin-off to shareholders.

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