After tentatively accepting an earlier acquisition bid from an affiliate of Symphony Technology Group for US$26.75 per share, and rejecting a subsequent offer of $27.75 per share from Open Text, Hummingbird has unreservedly accepted a follow-on acquisition proposal from Open Text valued at $27.85 per share.
There was a question as to whether Hummingbird would cut a deal with its former rival Open Text, and concerns have been raised as to how well Hummingbird’s existing customers will be served should Open Text prevail in the bidding sweepstakes. We will find out soon enough, with Hummingbird saying today that its board of directors has unanimously approved the $489-million transaction, and that it has recommended that shareholders vote in favor of accepting the deal.
In a press release announcing the agreement, Hummingbird says the transaction represents a premium of 20.5% to Hummingbird’s shares on May 25, 2006, the day prior to Hummingbird’s announcement that it had agreed to be acquired by an affiliate of Symphony Technology Group for US$26.75 per share. The winning bid from Open Text provides a 4.1-percent premium over the Symphony offer.
In terminating the agreed arrangement with affiliates of Symphony, however, Hummingbird must pay a break-up fee of approximately US$11.7 million, which effectively narrows the gap between the final offer from Open Text and the proposal that Hummingbird originally accepted from Symphony.
Now attention will turn to decisions regarding the continuance, termination, and support of Hummingbird and Open Text products, as well as to potential restructuring and employee layoffs at the merged company.