Sept. 03--Detroit-based Compuware has a tentative deal to sell itself for $2.5 billion to a private equity firm. But the firm, Thoma Bravo, which has offices in Chicago and San Francisco, is keeping quiet about its short and long-term plans for the Detroit business IT firm.
Five questions regarding Compuware:
-- Will there be layoffs?
Possibly. Layoffs are common at companies that get acquired by private equity firms. And because private equity buyouts (such as this one) are generally done with sums of borrowed money, the new ownership may feel a need to quickly reduce expenses to begin reducing the debt load.
But Compuware's management under CEO Bob Paul has been downsizing the company and laying off staff for the past year and a half, so many of the difficult steps that a private equity firm might do already happened.
Compuware currently has 3,000 employees, including about 1,200 in the Detroit area.
Other potentially promising signs for Compuware workers is that Thoma Bravo is reportedly looking to keep current management in place -- at least initially -- and has said that it doesn't invest in distressed companies but rather middle-market firms in fragmented or consolidating industries with "strong business franchises led by experienced executives who aspire to achieve industry leadership."
That philosophy could suggest that the buyout firm sees value in Compuware's current operations, and may be considering the use a scalpel rather than a meat cleaver in any restructuring.
-- Will Compuware sell its headquarters building in downtown Detroit?
A definite possibility. Industry analysts have speculated for over a year that Compuware might be looking to sell its headquarters around Campus Martius and lease back the space from a new owner, possibly Dan Gilbert's real estate arm. Gilbert would be logical buyer, as he has been snapping up real estate throughout downtown and his Quicken Loans already leases floors in the building.
-- Does the pending sale affect the Compuware Arena?
Not now, but it could in two years. The Compuware Arena in Plymouth is not owned by the company but rather Compuware's retired cofounder Peter Karmanos Jr. The company has a marketing and naming rights deal for the arena that runs through November 2016.
-- Will Compuware shareholders approve the $2.5 billion sale deal?
It is likely. Shareholders would get $10.92 per share in the deal, which is a 17% premium on Compuware's stock price last year. The company has been actively fielding sale offers for a year and a half, so a better deal might not come along.
-- Not a question on its future, but what does Compuware actually do?
Compuware makes and sells business software and IT services. Its programs and services help businesses run mainframe, database computers and cloud-computing platforms.
Its customers include General Motors, AT&T, Domino's Pizza, AAA, Salesforce.com, Yum! Brands, Sears and Wells Fargo.
Compuware has nothing to do with CompuServe, the dial-up modem Internet service that was popular in the 1980s and 1990s.
Contact JC Reindl: 313-222-6631 or firstname.lastname@example.org. Follow him on Twitter @JCReindl.
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