Compuware Looking For Suitors, Again

Compuware Looking For SuitorsNew York – On Friday, the management of Compuware Corporation (NASDAQ: CPWR) announced they were renewing efforts to sell themselves.  According to sources, the firm is currently courting BMC Software Inc. (NASDAQ:BMC) which is owned by Bain Capital Partners LLC and Golden Gate Capital, CA Technologies Inc. (NASDAQ:CA), as well as several buyout firms. 

The announcement comes after Compuware turned down a $ 2.3 billion offer from Elliot Management Corporation is January.  Following the announcement, shares in Compuware jumped to a three-month high, closing up at 2.4 percent at $ 11.72.

BMC, which was purchased by Bain and Golden Gate in May, has showed some interest in Compuware, but according to sources, negotiations are not likely to start until September.  According to sources, this was mainly due to regulatory reviews of the BMC takeover by Chinese authorities.  Even though the reviews are largely formalities, it is believed that Bain and Golden Gate do not want to take any chances at this time.

However, preliminary discussions between BMC and Compuware have already taken plan and it is believed that BMC could help Compuware to achieve up $ 200 million in annual cost savings.  Despite the synergies, negotiations are likely to be take some to complete as neither Bain or Golden Gate are sold on the growth prospects on Compuware’s current business model.

Given its previous efforts, it is unclear whether Compuware will find another suitor besides BMC as several private equity firms have passed on the company after the Elliot Management deal fell through last year.

Following first quarter earnings, released in July, several analysts upgraded their guidance on the company as it continues to cut costs in preparation for takeover.  J. Derrick Wood at Susquehanna International Group LLP rated the company neutral, raising his target price from $11 to $12.50.  Aaron Schwartz at Jefferies & Co. Inc. rated Compuware a buy, projecting a 12-month target price per share of $13.

Headquartered in Detroit, Compuware develops software mainframe and client–server systems and has more than 7,100 customers including 40 of Fortune’s Top 50 Companies on revenues of close to $ 1 billion.

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About the author

Audrey is a senior editor for the business and finance sections.