“Today we announce the complete spin-off of Covisint, a move we believe will provide Covisint an even greater opportunity to thrive as a fully independent company while allowing Compuware to focus exclusively on driving continued success in its core APM and Mainframe businesses,” said Compuware CEO Bob Paul. “Additionally, this action by Compuware’s Board is the latest example of the company’s demonstrated commitment to maximizing the value we deliver back to shareholders.”
On October 31, all shareholders of record as of October 16 will receive 0.1402 shares of Covisint for each share of Compuware owned. It is important to note that, unlike most spinoffs, this distribution will be taxable to shareholders.
The spin-off is expected to be taxable for U.S. federal income tax purposes. Thus, the value of the Covisint common stock, as well as any cash received in lieu of fractional shares, will generally be taxable. Compuware shareholders and RSU holders should consult their tax advisors with respect to U.S. federal, state, local and foreign tax consequences of the distribution, including, without limitation, the potential imposition of withholding taxes on the distribution of Covisint common stock.
Covisint shares, which had already been down nearly 70% YTD, plunged further today on the news as investors who had been hoping for a sale of the company fled.
Disclosure: The author holds no position in any stock mentioned