January 28, 2013 – Compuware Corp., the business- software maker is rebuffing a buyout offer from Elliott Management Corp.

Elliott Management’s offer of $11 a share significantly undervalues the company, Bob Paul, chief executive officer of Compuware, said in a statement late Friday. Compuware is cutting annual costs by $60 million, initiating a dividend and spinning off its remaining Covisint shares to deliver “meaningful value” for shareholders, he said.

“The plans outlined today are a step in the right direction,” Kirk Materne, analyst at Evercore Partners Inc., said in a note. Compuware’s announcement indicates it is “leaving the door open” for headcount reductions and other potential divestitures, said Materne, who rates the stock overweight with a $13 price target.

Elliott Management, which owned 6.7 percent of Compuware as of Jan. 14, said it’s still interested in the company, which had a market value of $2.3 billion before Friday’s share rally.

“Compuware has granted our request for access to diligence to confirm an offer for the Company,” Jesse Cohn, portfolio manager at Elliott Management, said in an e-mailed statement. “We remain very interested in the company.”

When it first offered to buy Compuware in December, Elliott Management said the company’s “execution, profitability and growth” had underperformed.

Compuware, which sells collaboration and project management tools, as well as performance management technology for cloud and mobile services, said it’s being advised by Goldman Sachs Group Inc. and Allen & Co.

Compuware is slowing down its expansion into cloud- computing services, enabling the return of cash to shareholders, said Jim Yin, an analyst at Standard & Poor’s.

“The success in cloud services is modest at best,” said Yin, who rates the stock at hold with an $11 price target.

After announced the denial of the buyout offer Friday, shares rose 7.5 percent to $11.57 at the close in New York, the highest price since April 2011. The stock has gained 21 percent since Elliott offered to buy the Detroit-based company on Dec. 17, compared with a 6 percent rise in the Nasdaq Composite Index in the same period.

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