Shares of business software developer Epicor Software Corp. [EPIC] climbed nearly 6%, to $6.97, in afternoon trading Tuesday, following news Monday evening that the company rejected shareholder Elliott Associates LP's $565 million takeover offer.

Activist hedge funds Elliott Associates and Elliott International LP two weeks ago offered to buy Epicor  for $9.50 per share, a 20.4% premium to the stock's closing price of $7.89 on Sept. 30. The hedge funds own 10.2% of Epicor.

At the time of the offer, Elliott portfolio manager Jesse Cohn had been urging Epicor's board and management to pursue strategic alternatives, only to be rebuffed.

Epicor responded to the bid by saying its board, in consultation with advisers Wilson Sonsini Goodrich & Rosati PC and UBS, "will carefully consider and review" Elliott's proposal. Once again its reply was no.

In a letter to Elliott, Epicor president and CEO Thomas Kelly said the company has products planned over the next 18 months to 24 months and has the opportunity to enhance itself in the market.

"Given the unsettled capital markets and our current product road map, we have only one focus at Epicor and that is to deliver value to our shareholders and customers," he said. -- Donna Block

See Oct. 13 press release from Epicor