Irvine’s Epicor Software Corp. reached an agreement with activist investor Elliott Associates LP, a New York-based hedge fund that has agitated for change and sought to buy the maker of business software in a hostile takeover last year.
The two companies reached what’s known as a “standstill agreement,” which puts a cap on Elliott’s ownership of Epicor. It also ensures that Elliott won’t make any moves to buy Epicor for a year.
Under the agreement, Elliott is allowed to purchase a maximum of nearly 15% of Epicor’s shares and up to $100 million of its debt.
Elliott now owns about 11% of Epicor’s shares and $28 million in debt.
Epicor had a recent market value of about $165 million.
As part of the deal, shareholders appointed two directors to Epicor’s board.
Epicor added Richard H. Pickup, one of its largest individual stockholders, and John M. Dillon to the board.
Neither of them have close ties to Elliott. But because it’s a large shareholder, Elliott likely had a say in the appointments.
A spokesman for Epicor said the addition of the two members was “mutually agreed upon.”
The deal seems to have eased tensions between Elliott and Epicor, which have sparred for the better part of a year.
“As a major shareholder interested in Epicor’s long-term value, Elliott is pleased to have worked with the company to reach this agreement,” said Jesse Cohn, portfolio manager at Elliott Associates. “With two shareholder-appointed representatives on its board and a constructive dialogue in place between Epicor and its shareholders, we believe the focus is firmly on maximizing shareholder value.”
“We believe the agreement we have reached with Elliott Associates is in the best interest of the company and its stockholders,” Chief Executive George Klaus said.
Epicor fought off a hostile bid by Elliott late last year that dragged on for two months.
The company rebuffed several attempts by Elliott to engage in talks.
Epicor’s board rejected its offer, which totaled $7.50 a share and valued the company at about $450 million, four different times.
Elliott was also looking to pay about $395 million for the rest of the company’s shares it doesn’t already own.
After the board rejected the initial offer, Elliot went directly to shareholders in an attempt to skirt the board.
Elliott finally withdrew its offer in late November. Analysts have speculated it would try again this year.
Klaus, who ran Epicor for more than a dozen years, was brought back to the top post last month by the board of directors after a tumultuous 2008.
Software veteran Tom Kelly ran the company for a little over a year while Klaus took a stab at retirement.
Epicor makes what’s known as enterprise resource planning software, which helps midsize companies manage accounting, customer contacts, inventory, sales and other back-office tasks.
Its shares are off some 70% in the past 12 months.
