An activist shareholder is taking aim at Canadian software firm Dye & Durham Ltd.’s decision to pursue more mergers and acquisitions, demanding independent directors “stop the shenanigans” and call a special meeting as soon as possible.
Colin Stewart, CEO and portfolio manager at JC Clark, joins BNN Bloomberg to discuss the outlook for Canadian M&A landscape.
Engine Capital Management LP managing partner Arnaud Ajdler said his firm was “blind-sided” by Dye & Durham’s plans for two acquisitions totaling C$69.3 million , accounting for 7.5% of the company’s market capitalization. He said the transactions go against previous commitments to reduce debt, which shareholders had asked for.
Dye & Durham pushed back on the letter, saying it’s confident in its ability to execute strategic mergers and acquisitions while achieving debt reduction targets. Dye & Durham’s management during its fourth-quarter earnings call laid out plans to acquire Lexis Affinity, a practice management software for law firms, and “another small tuck-in acquisition” with an upfront payment of C$21 million. However, the total consideration is much larger, according to Ajdler, as it includes C$44 million in deferred considerations, which he described as another form of leverage.
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