Sandell Sends Letter to Compuware Execs: Urges Sale of Compuware
In reaction to Compuware Corporation's (NASDAQ: CPWR) poor preliminary Q4 fiscal year 2013 earnings, Sandell Asset Management's Chief Executive Officer Thomas E. Sandell sent today the following letter to Compuware's CEO and Board of Directors:
Robert C. Paul Chief Executive Officer Compuware Corporation One Campus Martius Detroit, MI 48226-5099 cc: Board of Directors
Dear Mr. Paul,
Through both public and private correspondence with you and the Board of Directors over the past six months, we have identified our main concerns with the management of Compuware – namely, the tendency to over-promise and under-deliver, and poor execution. The Q4 fiscal year 2013 earnings preannouncement on April 3^rd only further proves that our concerns are justified.
You cited various reasons for the poor Q4 performance, including a weaker IT spending environment, delayed purchasing decisions by European clients and various "challenges and distractions". We suggest that the real reason for the poor Q4 performance is management's inability to execute operationally. The fact that you have disappointed the investment community, and all of your stockholders, with weak fundamental performance in three of the last four quarters convinces us that current management cannot be trusted to realize the significant value we see in the company. We believe that the only viable path to maximize stockholder value, rather than destroy it, is to execute a sale of the company to the highest bidder as promptly as possible.
In our most recent private communication on March 25^th, we demanded that the company conduct a full auction process, as opposed to only fielding incoming requests. We reiterate this view. Further, we understand that you may have rebuffed a serious bidder, based on your inflated view of the company's standalone value. We do not share that view, if the company stands alone under the stewardship of current management. Again, we urge you to conduct a full and robust auction and consummate a sale at the best available price as soon as possible.
Should you fail to promptly take steps to maximize stockholder value, which we believe can best (if not only) be accomplished through a robust auction process for sale of the company, we intend to pursue a change to the Board composition at the next annual meeting.
Thomas E. Sandell Chief Executive Officer
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