DETROIT (WWJ)  Compuware, which is quickly becoming one of downtown Detroit’s most iconic businesses, has rejected a takeover bid by Elliott Management.

In an announcement Friday morning, CEO Bob Paul said the bid of $11 per share undervalues the company and is not in the best interest of shareholders.

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Compuware outlined several other moves to placate shareholders restive about the Detroit-based software and IT services company’s stock performance. Included is a 50-cent-a-share annual dividend, scheduled to start later this year.

Compuware also pledged cost cutting in unspecified areas of general and administrative spending. The cost cutting target is $60 million over three years, beginning with the company’s fiscal year 2013, which begins April 1.

And Compuware pledged to spin off its rapidly growing Covisint secure collaboration and communication business to its shareholders following the pending public offering of 20 percent of its shares. Compuware filed a registration statement for the IPO in December with the U.S. Securities and Exchange Commission, but the exact date of the stock sale isn’t yet known. Compuware said the remaining 80 percent of Covisint shares would be distributed to Compuware shareholders within 12 months of the IPO.

In a conference call with analysts and journalists Friday morning, Compuware CEO Bob Paul wouldn’t comment on whether Compuware had received other offers.

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He added the spin-off of Covisint “will sharpen our focus and reduce costs, delivering greater profitability and meaningful value for shareholders.”

Paul said Compuware’s businesses in application performance management and Covisint are positioned for growth rates of 20-30 percent a year. Those businesses now comprise 40 percent of Compuware’s sales. He said Compuware has also “stabilized our mainframe business and realigned our cost structure.”

Goldman, Sachs & Co. and Allen & Co. served as financial advisors to Compuware in evaluating the offer. The law firm Skadden, Arps, Slate, Meagher and Flom LLP is serving as legal counsel to Compuware.

On Tuesday, Compuware announced net income of $25.3 million or 12 cents a share for the third quarter of its fiscal year ended Dec. 31, beating Wall Street analyst expectations of 11 cents a share, and an improvement from last year’s performance of $21.6 million or 10 cents a share. Revenue also rose.

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In early trading Friday, Compwuare stock was up 63 cents a share or 5.9 percent to $11.42 a share.