Investment firm Plantro Ltd. has submitted a formal proposal to acquire struggling legal software company Dye & Durham Ltd. for approximately $384 million, according to sources familiar with the matter. The offer comes after a year of significant turmoil at the Toronto-based technology firm.
Buyout Proposal Details
The acquisition proposal was delivered to Dye & Durham's special committee this week and presents a compelling offer of $5.72 per share in cash and notes. This valuation represents more than double the company's closing stock price from Thursday, signaling a substantial premium for shareholders.
Market reaction to the news was immediate and dramatic. Trading of Dye & Durham shares was temporarily halted at the open in Toronto on Friday. When trading resumed, the stock surged as much as 33 percent before settling at slightly lower gains by midday.
Company's Financial Challenges
The buyout proposal arrives at a critical juncture for Dye & Durham, which has experienced severe financial distress throughout the year. Prior to Friday's trading surge, the company's shares had plummeted 85 percent year-to-date, reducing its market valuation to just $182 million.
The technology firm faces significant challenges, including $1.6 billion in debt and potential default risks stemming from delayed financial disclosures. These financial pressures have created an environment ripe for acquisition discussions.
A representative for Dye & Durham confirmed receiving the proposal but declined further comment. Plantro officials did not respond to requests for comment regarding the acquisition offer.
Leadership Turmoil and Previous Offers
The current proposal continues a pattern of involvement from Matt Proud, the former Dye & Durham CEO who controls Plantro. Proud departed the company late last year following a proxy battle with activist investor Engine Capital, but quickly began efforts to return to the organization.
In February, Proud and Plantro floated a substantially higher offer of $20 per share, valuing the company at approximately $1.3 billion. Although that proposal failed to materialize into a formal agreement, it demonstrated Proud's ongoing interest in taking the company private.
The relationship between Plantro and Dye & Durham's board has been marked by conflict and temporary resolutions. In July, the company initiated a strategic review after reaching a truce with Proud that paused governance disputes. This review examined various options including a potential sale, breakup, recapitalization, or merger.
Recent Governance Changes
The fragile peace between the board and Proud collapsed by October, leading to significant developments. Canadian Imperial Bank of Commerce withdrew as adviser to the special committee, and Dye & Durham filed legal action accusing Proud and Plantro of violating their cooperation agreement and making misleading statements about the company's finances.
This week brought additional governance shake-ups, with the company appointing veteran dealmaker Alan Hibben as independent chair and adding CEO George Tsivin to the board. Three directors resigned, including Engine Capital's Arnaud Ajdler, as the company prepares for its December 31 annual meeting.
In a separate development, OneMove Capital Ltd., led by Tyler Proud (Matt Proud's brother and Dye & Durham co-founder), nominated five directors to the board, citing poor leadership from directors installed by Engine Capital.
The proposed acquisition represents a potential resolution to the ongoing challenges facing Dye & Durham, though whether the special committee will accept the offer remains uncertain given the complex history between the parties involved.
