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Compuware Buys Auto Industry Play Covisint

One-time online auto supply management play Covisint has sold its messaging products and technology to Compuware Corporation, a deal that signals Covisint's B2B run is at the end of its road.

The deal comes just over a month after supply management software maker FreeMarkets agreed to acquire Covisint's auction services and customer base. Covisint launched in 2000 as a business-to-business (B2B) marketplace run by major auto makers.

Details of the deal were not released. However, Peter Kormanos Compuware's CEO, said Compuware expects to record revenue of about $20 million from the acquisition during its next fiscal year.

During a conference call Thursday to discuss the deal, Kormanos did not mince words about Covisint's one-time mission and how the assets would be used.

"Nobody likes the auctions. I don't like the auctions either. I think it's a crappy way of doing business and so its gone," he said in the call. "Now we have something that helps the suppliers and the OEM's, something that is extremely valuable to them. They get a return on their investment rather than having their prices marked down."

Although the Covisint venture struggled to hit its stride after the technology downturn started in late 2000, the company claimed a customer base of about 135,000 users across 96 countries at the time of the asset sale to Compuware.

"Compuware's financial stability, global presence and mature services and development organizations will only enhance the value Covisint is able to deliver to the automotive industry," Karmanos said. "This is an outstanding opportunity to gain synergy from extended relationships and enhanced technology."

Covisint's CEO Bob Paul plans to retain his position as part of the deal; most employees are also expected to be retained.