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The Morning Brief: Elliott Management’s Busy Day

Thursday was busy for sometime activist investor Paul Singer of Elliott Management. First, Compuware announced that it worked out a compromise agreement with the New York–based hedge fund manager. Under the deal, Compuware agreed to nominate two new members to its board of directors who have extensive technology industry experience. Elliott agreed to a limited set of standstill and voting provisions, including voting in favor of Compuware’s proposed slate of directors at the March annual meeting. The agreement is effective until December 31 or 30 days before next fiscal year’s deadline for shareholder nominations, whichever is earlier — in other words, less than a year.

“We appreciate the opportunity to have a constructive engagement with Elliott,” said Bob Paul, president and chief executive officer, in a press release, although “appreciate” is probably a stretch. “We took an active interest in Compuware because we recognized the underlying value of the company and its potential to drive significant value to shareholders,” said Jesse Cohn, an Elliott portfolio manager, in the same press release.

Meanwhile, Singer’s two main hedge funds, Elliott Associates and Elliott International, announced that they finally agreed to sell to McKesson Corporation 4,866 bonds issued by Celesio Finance B.V. and convertible into shares of Celesio AG. Elliott also noted it will tender to McKesson at least 27,175,094 shares, noting that McKesson’s offer of 23.50 euros per share “is a best and final.”

We had noted last month that Elliott’s funds said they won’t sell their shares in Celesio AG to McKesson Corp., which has offered to acquire the German drug distributor, asserting that the offer “substantially undervalues” the company and is not in the best interests of Celesio shareholders and bondholders. “Simply put, Elliott believes that Celesio’s shareholders and bondholders are not getting a fair deal at the current price,” it stated in a press release at the time. Apparently it is happy with the current price.

Blue Harbour Group, the activist hedge fund firm founded in 2004 by Clifton Robbins, posted strong results for 2013. His $1.4 billion Blue Harbour Strategic Value Partners, a long-biased fund, was up 25.04 percent, while Blue Harbour Active Ownership Partners, a $500 million long-only fund, rose 30 percent. The Greenwich, Connecticut–based manager, who was previously a general partner at private equity firms KKR and General Atlantic, focuses on North American small- and mid-cap companies.

Shares of J.C. Penney rebounded Thursday, rising 3.80 percent to close at $7.65.

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