Business software maker Compuware Corp turned down hedge fund Elliott Management Corp's proposal for a $2.3 billion buyout, choosing instead to proceed with spinning-off a non-core unit.

Paul Singer's Elliott Management had offered to buy Compuware for $11 per share in December, raising questions about the management of the company.

On Friday, Compuware said it would proceed with the IPO of its Covisint unit, which sells cloud software, and then spin it off to its shareholders.

Compuware's board also approved an annual dividend of 50 cents per share starting from the first quarter of fiscal 2014.

Compuware shares closed at $10.75 on Thursday on the Nasdaq.