Dye & Durham scuttles plan
Management at Dye & Durham Ltd. has reversed course on its plan to take the company private, instead opting for the “status quo.”
The Toronto-based legal-technology company said on Friday that it had completed a strategic review, prompted by the management-led takeover proposal, and that it would continue to pursue its acquisition-fuelled growth strategy as a public company. The offer came in May, less than a year after Dye & Durham made its public market debut.
The company also handed over 6.8 million stock options to chief executive officer Matthew Proud to “further align the interest of the Chief Executive Officer with that of shareholders,” it said in a statement.
Proud’s company Plantro Ltd. owns nine per cent of Dye & Durham, making it one of the company’s largest shareholders, according to Bloomberg data.
The company also announced that it had entered into a new $1.8 billion committed senior secured credit facility to repay existing debts and boost its acquisition strategy.
“We believe the New Facility will give us additional capital flexibility, allowing us to continue to execute on our Build to a Billion strategy,” Proud said in a statement.
Bank of Montreal analyst Thanos Moschopoulos said that it is unclear why the move to privatize the company failed, but that management may have been unable to finance the deal or that the board and shareholders might have thought the offer was unattractive, among other possibilities.
“We believe management had been intent on remaining with the business, and on driving the bus with respect to a potential privatization,” Moschopoulos said in a note to clients.
“While the board may have well run a full and fair process, this aspect may have kept other potential buyers from offering a higher price (as hostile deals are rare in tech).”
In the spring, executives had offered to purchase Dye & Durham for $50.50 per share, or $3.4 billion, a 23 per cent premium to its closing share price that day.
Overall, Dye & Durham shares are up more than fivefold since its July 2020 initial public offering, which raised $150 million and was 13 times oversubscribed.
One of the company’s largest shareholders, Mawer Investment Management Ltd., opposed the proposed takeover, saying that the company would benefit from remaining in public markets.
Since going public last year, Dye & Durham has made six acquisitions.
In May, it purchased U.k.based legal data provider Future Climate Info Ltd. for $94 million and U.k.-based property-software company Terrafirma IDC Ltd. for $20 million.