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Hedge Fund Takes Epicor Offer to Shareholders

A New York hedge fund is taking its board-spurned offer for Irvine’s Epicor Software Corp. directly to shareholders.

Elliott Associates LP said Wednesday it plans to make its $566 million offer for the business software maker to shareholders in a bid to go around Epicor’s board.

Epicor said it is reviewing the bid and advised its shareholders to wait for a response before selling any shares.

On Monday, directors at Epicor said they “unanimously determined not to pursue the proposal,” the company said in a statement.

On Oct. 1 Elliott sent an unsolicited letter to Epicor’s board that said it was prepared to pay $9.50 a share for Epicor, 20% more than what the company’s stock was trading at before the offer.

Epicor shares opened up about 10% Wednesday morning before easing amid a broader stock selloff. The shares closed up less than 1% on a market value of $407 million.

Elliott owns 10.2% of Epicor, making its offer for the rest of the company’s shares worth about $510 million.

The hedge fund operator also owns $28.7 million in debt that converts to Epicor stock.

The offer to shareholders is good through Nov. 12 and could be extended.

The move sets up a potential battle between Epicor’s board and its largest shareholder.

In rejecting Elliott’s offer, Epicor’s Chief Executive Tom Kelly said the company is focused on the rollout of its newest software suite, Epicor 9.

“Given the unsettled capital markets and our current product roadmap, we have only one focus at Epicor and that is to deliver value to our shareholders and customers,” Kelly said in a statement.

Epicor makes enterprise resource planning software that helps midsize companies manage accounting, customer contacts, inventory, sales and other tasks. It also makes software for retailers.

The company has slumped this year with slower sales of cash register software to clothing retailers and fewer licensing deals. Profits also have been impacted by spending ahead of the release of Epicor 9.

Even with a surge on Elliott’s buyout bid, shares of Epicor are off about 40% this year.


For more on the offer for Epicor, see the Oct. 13 edition of the Business Journal.

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