Reuters: Global Markets: BMC Software rebuffs Elliott with poison pill

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BMC Software rebuffs Elliott with poison pill May 14th 2012, 16:10 By Chandni Doulatramani Mon May 14, 2012 12:10pm EDT (Reuters) - BMC Software Inc (BMC.O) adopted a shareholder rights plan to help stave off a potential acquisition, after hedge fund group Elliott called for a sale of the company and told the business software maker it acquired a more than 5 percent stake. Elliott Associates LP and Elliott International LP, which together hold the stake in BMC, plan to nominate a five-member slate to its board, BMC said on Monday. BMC, which makes software for storage management, database performance and data recovery, adopted a poison pill with a 10 percent trigger that will expire on May 11, 2013. New York-based activist hedge fund Elliott often urges companies to sell themselves and sometimes starts proxy fights to elect its own representative to the board. Elliott took similar positions in Novell Inc and Blue Coat Systems Inc that resulted in the sale of those companies. Another of Elliott's target, Brocade Communications System Inc (BRCD.O), is also looking to sell itself. Analyst Jeff Gaggin with JG Capital expects Oracle Corp (ORCL.O) to be a prospective buyer for BMC, and said the company will probably be bought out for a price of $52 per share. "Larger software companies like Oracle would be a good fit for it, because Oracle is looking to become more like IBM (IBM.N)," Gaggin told Reuters. BMC, which offers software and cloud platforms that help businesses cut costs by allocating resources better, is valued at about $6.5 billion. Shares of BMC Software, which have lost nearly a quarter of their value in the past year, were up 9 percent at $44.24 on Monday on the Nasdaq. "Investors have grown wary of BMC's ability to execute," Gaggin said, expressing fears that Chief Executive Robert Beauchamp might be removed. BMC's board rejected Elliott's proposal to sell the company and said it was not in the best interest of the stockholders, the company said in a statement on Monday. BMC also rejected Elliott's request to form a special committee. Analyst Gaggin said this is probably the best long-term way for BMC to create shareholder wealth. BMC declined to comment beyond the press statement. Elliott has not yet reported its stake to U.S. securities regulators. It has 10 business days from the time they took a 5 percent stake to do so. Dodge & Cox, Columbia Management Investment Advisers LLC, Vanguard Group Inc and BlackRock Institutional Trust Co also hold at least 5 percent each in BMC. Morgan Stanley is the financial adviser and Wachtell, Lipton, Rosen & Katz is the legal counsel to BMC. Last week BMC posted a 21 percent increase in revenue from professional services, and its bookings in cloud-related licensing rose. (Reporting by Supantha Mukherjee and Chandni Doulatramani in Bangalore and Nadia Damouni in New York; Editing by Joyjeet Das and Don Sebastian) Link this Share this Digg this Email Reprints

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