In June, Elliott Associates, the venerable New York hedge fund, said it had acquired a stake above 5 percent and won the election of two directors to the board of the Houston company.
Shares of BMC soared as high as $45 in late Monday trading before easing to $42.85, up $1.35 or about 3.2 percent, after the Wall Street Journal reported the potential sale. The 52-week high was $45.70.
BMC declined to comment and had not filed anything with the U.S. Securities and Exchange Commission by late Monday. In June, when Elliott stated buying into the company, BMC announced a so-called “poison pill,” by issuing each shareholder rights to purchase a preferred share for every share of common stock.
The move was “to protect shareholders from coercive and otherwise unfair takeover tactics,” BMC said in its filing. The preferred shares would be valued at $180.
“We do not believe the Elliott proposal is in the best interests of our stockholders,” said BMC CEO Bob Beauchamp at the time. The company hired Morgan Stanley (NYSE: MS) for financial advice and Wachtell, Lipton, Rosen & Katz for legal advice.
BMC is one of the best-regarded enterprise and middleware developers. At Monday’s value, its market capitalization is $6.9 billion.
Peer software companies in the sector such as Sybase, Hyperion Software and BEA Associates have previously been snapped up by Oracle (Nasdaq: ORCL), the No. 1 database developer; Hewlett-Packard Co. (NYSE: HPQ) and International Business Machines Corp. (NYSE: IBM).
Gary Bloom, a BMC director, is a former executive vice president of Oracle and served as a director of Taleo Corp. until Oracle acquired it earlier this year.
Elliott, one of the oldest hedge funds, had previously acquired stakes in software companies such as Novell and Blue Coat Software before they were acquired. The hedge fund suggested one of the top software companies could be a buyer, as well as private equity companies including Bain Capital and KKR Inc. (NYSE: KKR), which have previously made technology investments.
Other technology companies that have had to deal with activist investors this year include Yahoo Inc. (Nasdaq: Yahoo), AOL Inc. (NYSE: AOL) and Research in Motion (Nasdaq: RIMM), the BlackBerry developer.
BMC previously reported first-quarter net income fell nearly 50 percent to $54.1 million, or 39 cents per share as revenue for the period ended July 31 was flat at $504.4 million.