Elliot Proposes to Buy Compuware - Analyst Blog
19 Dicembre 2012 - 4:30PM
Zacks
Recently, Elliott Management Corp
declared its intention to buy Compuware
Corporation (CPWR) for $2.3 billion. Elliott Management
offered $11.00 per share or a premium of 15% on the Compuware’s
Friday closing price for acquiring the company.
Headquartered in New York, Elliott,
which owns an 8% stake in the company, is mainly engaged in
extensive research to resolve any investment related problems. It
has a total asset of nearly $20 billion.
Elliott Management through a letter
stated that although Compuware is a well-established company, its
profit and growth prospects were not quite impressive in recent
times. Hence, with the proposed acquisition, Elliott management is
expecting to reinstate the company’s leading position in the
software and technology service sectors and increase its
shareholders’ value in the long run through its extensive
experience in the specified industry.
After the proposal, the company’s
share surged nearly by 13.5% to $10.82 on Tuesday. Year-to-date,
the company’s value soared by 31.3%.
Later, the company through a
statement confirmed that it has received the proposal and it will
weigh and consider the offer. Sandell Asset Management, which owns
about 2.5% stake in the company, has also agreed to the acquisition
proposal.
In a different story, the company
is likely to make an initial public offering (IPO) of its Covisint
Corp. segment. This was done with the clear intent of raising the
functionality of the specified sector.
Earlier, Compuware reported
earnings per share of 5 cents in the second quarter of fiscal 2013,
compared to 10 cents in the year-ago quarter and 5 cents in the
previous quarter. The earnings in the reported quarter missed the
Zacks Consensus Estimate of 6 cents per share.
Total revenue for the quarter came
in at $220.6 million, declining 15.4% year over year and 2.5%
sequentially. The company reduced its revenue guidance from $1.04
billion to $1.05 billion to $980-$995 million for fiscal 2013 along
with earnings per share of 36– 40 cents from 43-47 cents. Judging
by the depressing state of affairs in which the company now
operates, the offer of acquisition may appear advantageous for
Compuware.
Compuware operates in an intensely
competitive landscape. Rivals include BMC Software
Inc. (BMC), CA Technologies (CA),
IBM Corporation (IBM). In the software business,
the company is always under pressure for innovating new products to
attract new clients and also maintain the existing associations
which may appear to be expensive.
The current Zacks Consensus
Estimates for the third quarter of fiscal 2013 and for fiscal 2013
are 11 cents per share and 38 cents per share, respectively. The
company currently retains a Zacks #3 Rank, which translates into a
short-term ‘Hold’ rating. We also have a Neutral recommendation on
the company’s stock.
BMC SOFTWARE (BMC): Free Stock Analysis Report
CA INC (CA): Free Stock Analysis Report
COMPUWARE CORP (CPWR): Free Stock Analysis Report
INTL BUS MACH (IBM): Free Stock Analysis Report
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