Compuware

Compuware's world headquarters in downtown Detroit.
user Bnosnhoj

Compuware, one of the largest employers in the city of Detroit, is likely to become a privately held company under a proposed deal with a private equity firm.

Thoma Bravo, LLC agreed to buy the company for around $2.5 billion. The deal still has to be approved by shareholders.

David Gelles of the New York Times blog DealBook writes this transaction ends the pressure put on the company by the hedge fund "Elliot Management":

The agreement ends a process that began in 2012, when Elliott took a stake in the Detroit-based company and made an offer of $11 a share to acquire it. Elliott, which still owns 9.5 percent of Compuware, has agreed to vote in favor of the deal.

Thoma Bravo will pay $10.92 a share for Compuware, less than Elliott’s original offer. But Compuware investors are likely to support the deal, which represents a 17 percent premium to Compuware’s stock price last week, and comes after a series of moves intended to create value for shareholders.

Compuware's CEO, Bob Paul, tells the Detroit Free Press that he doesn't expect any big moves for the company and that its headquarters will remain in downtown Detroit.

“Because we didn’t sell it to a strategic competitor, we are firmly entrenched in Detroit,” Paul said.

“The business will continue to operate as is, but just in a private setting now. The leadership team remains intact,” Paul added.

Paul said Compuware’s new owner-to-be, private equity firm Thoma Bravo, is experienced in working with software firms and existing management to improve operations.

The company currently employees around 1,100 to 1,200 people in downtown Detroit, according to the Freep.

Erik Gordon is a professor at the Ross Business School at the University of Michigan.  He says the sale is a sad day. 

He says in the 1980s, Compuware was a giant in the IT industry, when mainframes ruled.  Then, came PCs - followed by wave after wave of innovation.

"Compuware lived in its glorious past, and now has sort of come to at least a soft landing for its future.  At least it didn't close its doors."

Gordon says the situation could be a lot worse, had a rival software firm bought Compuware.  He says Thoma Bravo owns a number of mid-size software companies.

"These are people who really know what they are doing," says Gordon.  "It's not just a bunch of money guys who are going to come and leverage up the deal and take all the money in the middle of the night that they can get out.  These guys run software companies.  So it's a real good development for Compuware."

These days everybody in Detroit is in awe of Dan Gilbert, the Quicken Loans czar who moved his operations from the suburbs to downtown, and has been buying up millions of square feet of city real estate. Some have joked that the cure for Detroit’s problems is just to get through bankruptcy and sell him the rest.

But we sometimes forget that before there was Dan, there was Pete. Peter Karmanos Jr, that is. Ten years ago, he was the first Detroit-area CEO in modern history to move a major corporation downtown -- Compuware, which he founded with two other guys forty years ago, and built into a powerhouse.

Facebook

There’s been a lot of attention paid to the problem of Michigan’s brain drain, how to keep college graduates in Michigan, applying their talents and energies to issues and challenges that are here at home instead of heading out of state.

We discovered an intriguing program offering a strategy to keep tomorrow’s leaders in the state. It’s called Challenge Detroit. It’s a leadership and professional development program that’s currently in its first year.

Leigh Ann Ulrey was one of the 30 graduates chosen out of hundreds of applicants to be part of the 2012-2013 Challenge Detroit program. She is a culture community and diversity specialist at Compuware in downtown Detroit. She joined us today from the Compuware headquarters.

Listen to the full interview above.

Urban Adventures / flickr

Compuware's headquarters is the One Campus Martius building in downtown Detroit.

JC Reindl of the Detroit Free Press reports this morning that the company plans to lay off 160 employees "and close or shrink" 16 offices around the world. Those layoffs will affect workers in Detroit:

Sources told the Free Press this week that several executive-level workers at the firm’s downtown Detroit headquarters lost their jobs, including a top official with a total compensation package last year that exceeded $1 million.

Compuware has yet to confirm or deny reports that it is actively seeking a buyer. In January the company’s board rejected an unsolicited $2.3-billion, $11-per-share offer from a New York hedge fund as too low.

Reindl reports the company employed close to 2,000 people in 2012 at its downtown headquarters.