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Investor Starboard asks Compuware to consider immediate sale

By Harro Ten Wolde and Lehar Maan

(Reuters) - Compuware Corp should consider an immediate sale or a new restructuring plan, activist investor Starboard Value LP said in a letter to the business software maker on Thursday.

Compuware had not received any takeover offer that was high enough for it to agree to a deal, Chief Executive Bob Paul told Reuters in an interview before the letter was made public.

The company has been at the center of takeover speculation after it rejected a $2.3 billion offer from its largest shareholder, Elliott Management Corp, in January and has since held talks with several private equity firms.

Reuters reported in August that the company had renewed efforts to sell itself.

"But we have received nothing that would lead us to believe that an acquisition is immediately imminent," Paul told Reuters on Thursday. He did not provide further details.

Compuware was not available for comment after the publication of the letter.

Starboard, which has a stake of just under 5 percent, asked Compuware to change the composition of its board and broaden its restructuring plan, if it decided to remain independent. (http://link.reuters.com/vux64v)

The activist investor outlined a restructuring plan that included a $450 million share repurchase program, sale of non-core assets, higher cost cuts and a dividend increase.

Starboard asked Compuware to deepen its cost cuts to $150 million, from the $80-$100 million it has announced.

A consortium led by Bain Capital LLC and Golden Gate Capital LLC agreed in May to buy Compuware's rival BMC Software for $6.9 billion and has been interested in merging it with Compuware, though it has not made a concrete move yet.

"We believe the constant state of flux that has existed for the past year at Compuware is one of the primary reasons that the company's stock price continues to trade below Elliott's offer price," Starboard said in its letter.

Compuware's shares were up 2.6 percent at $10.80 in afternoon trade on Thursday. Elliott had offered to buy the company for $11.00 per share in January.

(Additional reporting by Neha Alawadhi in Bangalore; Editing by Savio D'Souza)

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