Cloud Computing: Elliott Management Turns Screw on BMC to Sell
June 3, 2012
Elliott Management, the $20 billion hedge fund that now owns 6.5% of BMC and wants it to sell out to anybody that’ll better its $6.8 billion market cap, filed a 36-page PowerPoint presentation with the SEC Thursday laying out its case.
Elliott helped push Novell into the arms of Attachmate and thinks that BMC could be fodder for Oracle, HP, Cisco, CA, Dell, EMC, Symantec, IBM or, for that matter, a technology-focused private equity firm such as KKR, TPG, THL, Bain Capital, Blackstone Group, Apax Partners, Silver Lake and Golden Gate Capital.
BMC’s software manages distributed server networks and mainframes. Wall Street has previously offered those names but figures BMC would probably have to be split up to get a sale done…
Failing a sale Elliott proposes that BMC take on debt, buy back shares or pay a dividend.
In a letter to the BMC board that it reproduced as a press release it claimed other shareholders are "frustrated by the board’s intransigence and apparent unwillingness to actively engage in a thoughtful approach to maximizing stockholder value."
The presentation details what Elliott claims is the company’s "significant underperformance due to poor management execution and a lack of engaged board oversight."
It thinks the current board should go and has proposed a slate of its own "to bring fresh insight to the board" including former HP sales, marketing and strategy chief Thomas Hogan; the former head of Siemens Global Enterprise Communications Business who also ran HP’s outsourcing, consulting and professional services business in the Americas Andreas Mattes; former Salesforce CEO and now CEO of Engine Yard John Dillon; and Infor founder and chairman Carl James Schaper.
Previously on the list and no longer there is former Hitachi Data Systems CEO and former HP Enterprise Servers, Storage and Networking Group head David Roberson.
BMC, which doesn’t want to sell, adopted a poison pill to avoid a hostile takeover a couple of weeks ago when it realized it was in a proxy fight.
Its shares have dropped around 20% in the last year.