Freeing itself from the fetters of public-investor expectations, IT infrastructure company Compuware is becoming privately held, with equity investment firm Thoma Bravo purchasing the company outright for approximately US$2.5 billion.
“Compuware is now best suited to focus on its core mainframe and [application performance management] businesses as a private-equity backed company, “ said Bob Paul, Compuware CEO, in a statement, adding that the move will give the company more flexibility to manage its business with a long term vision.
Current shareholders of Compuware will get an aggregate value of approximately $10.92 per share, a 17 percent bump from the company’s stock price at the close of trading on Friday.
Another IT infrastructure company that became privately-held after being publicly traded was BMC, who went through the process in 2013. BMC officials have said that being free from the quarterly expectations of shareholders allows the company to make longer-term investments in new technologies and markets.
The Compuware board of directors has unanimously approved the agreement, which is still subject to approval by Compuware’s shareholders, as well as by regulatory bodies.
Founded in 1973, Compuware specializes in application performance management software, as well as software for managing mainframes. The company has about 7,100 enterprise customers worldwide. For its fiscal year 2014, ended March 31, Compuware generated approximately $720.8 million in revenue, down 0.4 percent from the previous fiscal year. In September 2013, Compuware spun out Covisint, which now provides cloud management software, in an initial public offering.
Thoma Bravo had also invested in BMC before that company went private, and also owns stock in storage giant EMC. The firm manages about $7.5 billion worth of investments.
One analyst applauded the move as beneficial for Compuware.
Compuware "might be called a poster child for privatization," wrote Charles King, principal analyst of Pund-IT, in an email.
While the company has had a history of profits and dividend payments, it never has gotten as much positive attention from investors as those companies in hotter, more headline-generating areas of technology, such as mobile, big data or cloud services.
"Compuware is a solid company in a critical part of the IT market whose steady profitability makes it an extremely attractive business investment," King said. As a result, rumors have swirled about a possible Compuware acquisition for some time, he said.
Dell's move to go private in October 2013 has led many technology companies, including Compuware, to consider how such a move might benefit them, King wrote.