* Offers $11/shr at 15.4 pct premium to Friday close
* Compuware says will review proposal
* Shares up 13 pct
By Sayantani Ghosh and Sruthi Ramakrishnan
Dec 17 Activist hedge fund Elliott Management
Corp offered to buy business software maker Compuware Corp
for $2.3 billion, seven months after it pushed for a
sale of rival BMC Software Inc.
Elliott, which disclosed an 8 percent stake in Compuware on
Monday, is known for publicly agitating companies to seek a sale
or to take control of the board.
The hedge fund, founded and run by publicity-shy Paul
Singer, used a similar tack with Novell and Blue Coat Systems,
resulting in the sale of those companies.
BMC, in which Elliott affiliate Elliott International
Capital holds a roughly 8 percent stake, agreed in June to add
two of the hedge fund's nominees to its board.
Elliott Management's $11 per share offer for Compuware
represents a 15.4 percent premium to its Friday close on the
Nasdaq. Compuware's shares rose to just below the offer price on
"We believe in the quality of Compuware's assets - however,
its execution, profitability and growth have meaningfully
underperformed," Elliott said in a letter to Compuware's board.
Compuware confirmed it had received Elliott's offer and said
it would review the proposal.
S&P Capital's Jim Yin said Elliott's bid could flush out
higher offers for the company.
"Although we think Elliott Management may withdraw its offer
after discovering that some of Compuware's businesses have
deteriorated more than expected, we think it is as likely
another bidder may appear," Yin said in a note.
Compuware, which makes software to manage large computer
networks, posted a 9 percent jump in sales for the year ended
March 31, after several years of lackluster sales.
The company filed last week for a possible initial public
offering of its Covisint Corp unit, which it said would allow
the business to pursue strategic options.
Yin said larger suitors could be interested in parts of the
company like Covisint, but declined to name potential bidders.
He raised his price target on the company's stock by $4 to $11.
Shares of the company were up 13 percent at $10.75 -- their
highest in 18 months -- in afternoon trading on Monday. The
stock is up 15 percent this year, while BMC has risen 23 percent
and CA Inc is up 8 percent.
All the six analysts covering Compuware's stock have a "buy"
or a higher rating on it, according to Thomson Reuters data.