By james art (Bloomberg) — Dye & Durham Ltd . needs a new board and management team instead of a sale, says one shareholder.
Engine Capital LP, which says it owns about 7.1 percent of Dye & Durham’s stock, said the company’s board “appears to have already authorized a reactionary sale process at the worst possible time and doubled down on its mistakes.” Last week, Engine said it still plans to pursue boardroom changes and will present its own slate of director candidates at the annual meeting in December.
Dye & Durham, which provides software and services to the legal and banking sectors, is working with advisers on a strategic review that could include a sale, merger or other transaction, the Toronto-based company said Tuesday, confirming an earlier report by Bloomberg News. There is no guarantee it will get a deal, the company warned.
“The board has a fiduciary duty to consider all potential avenues to enhance shareholder value while remaining focused on executing on the company’s standalone strategy,” a Dye & Durham spokesperson told Bloomberg, adding that Engine had no reasonable basis for its “dishonesty “. claims’ and ‘misleading claims’.
In a takeover, the stock could be worth significantly more than Wednesday’s closing price of C$19.25, given its earnings strength and growing recurring revenue mix, according to BMO analyst Thanos Moskopoulos, who raised his price target to 23 Canadian dollars per share. The purchase price for the company, if a formal offer materializes, could range from C$25 to C$30 per share, Moskopoulos added.
Dye & Durham went on an acquisition spree after an initial public offering in 2020. But it was forced to revise its growth strategy due to concerns about high leverage. The company had more than C$1.5 billion ($1.1 billion) in long-term debt as of June 30.
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