By james art Dye & Durham Ltd. DND-T has put itself up for sale, becoming the latest in a string of Canadian technology companies to consider a buyer after a tough few years for the sector.
The legal software company said on Tuesday that it has expanded the scope of its strategic review process to include “a sale of the company, a merger, sale of assets or other strategic transactions.”
D&D said in its statement that it has no timetable for any transactions and no assurances that it will be sold.
Shares in the Toronto-listed company jumped 9.3% after the initial report on D&D’s strategic review process, reaching $18.47 a share at the market close. The company’s market capitalization is $1.23 billion.
The company is working with advisers to field interests from US-based private equity firms and other suitors, Bloomberg reported midday on Tuesday, citing unnamed sources, adding that discussions were at an early stage.
Dye & Durham provides software for legal and business professionals. The company has seen big share price gains since its initial public offering in 2021, but concerns about its high debt levels and acquisition-based growth strategy have sent shares tumbling in subsequent years.
The company cleared a legal hurdle related to a class-action lawsuit in Ontario last year, but its CEO Matthew Proud and former chairman Tyler Proud are still embroiled in a legal wrangle over the composition of the company’s board. Meanwhile, several hedge funds have criticized the company’s alleged pattern of poor strategic decision-making, with one getting a board seat this month to allay those concerns.
D&D was the first of 20 tech companies to go public on the Toronto Stock Exchange in the early days of the pandemic. Nine more are in the process of delisting.
This is not the first time Dye & Durham has considered privatization. In 2021, a group of investors led by its management team offered to buy the company less than a year after its listing on the Toronto Stock Exchange. But the deal fell apart after shareholder pushback and challenges from regulators.
In a note to investors, BMO analyst Thanos Moskopoulos said the company’s stock “could be worth significantly more on pullback given current valuation, earnings strength and growing recurring revenue mix.”
He said the sale of D&D is likely to generate a significant share of private capital, given the company’s diversified revenue mix and strong market position in many segments.
Payfare, a payments company based in Toronto, also launched a strategic review after its biggest customer failed to renew, sending shares plummeting.
Lightspeed Commerce is also considering exiting the public markets. It went public in 2019.