Ex-Dye & Durham CEO’s Firm Said to Offer 111% Premium to Buy the Company
TL;DR
Plantro Ltd., led by ex-Dye & Durham CEO Matt Proud, offers a 111% premium to take the company private for C$384M. The proposal includes cash and notes amid financial struggles and governance disputes.
Key Takeaways
- •Plantro's offer of C$5.72 per share is more than double the recent stock price, highlighting a significant premium.
- •Dye & Durham faces financial challenges with an 85% stock drop and C$1.6B in debt, risking default.
- •The proposal includes immediate binding agreement with no due diligence and a go-shop period for higher offers.
- •Ongoing governance issues include past proxy fights, legal actions, and recent board changes with new leadership.
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Plantro Ltd., the investment firm controlled by former Dye & Durham Ltd. executive Matt Proud, has submitted a fresh proposal to take the legal software company private for about C$384 million ($273 million), according to people familiar with the matter.
The offer was sent to Dye & Durham’s special committee this week and proposes to pay C$5.72 a share in cash and notes, according to the people, more than double the stock’s closing price on Thursday.
Dye & Durham’s shares have dropped 85% this year, giving the company a stock market value of just C$182 million. That’s largely because it’s burdened with some C$1.6 billion in debt and faces a potential default due to late financial disclosures.
A representative for Dye and Durham declined to comment. A spokesperson for Plantro didn’t immediately respond to a request for comment.
The proposal lands after a year of upheaval at Toronto-based Dye & Durham, which provides technology for law firms to help them manage their practices, handle legal accounting and perform other tasks.
Proud, the company’s longtime chief executive officer, departed late last year after losing a proxy fight to activist investor Engine Capital. But soon after, he was trying to come back.
In February, Proud and Plantro floated a C$20-a-share offer worth about C$1.3 billion. Although that didn’t go anywhere, he continued to agitate for the company to go private.
In July, Dye & Durham launched a strategic review after reaching a truce with Proud and Plantro that paused a heated governance dispute. The review is examining options including a sale, breakup, recapitalization or merger.
The fragile peace between the board and Proud collapsed by October. Canadian Imperial Bank of Commerce, adviser to the special committee, withdrew from the mandate, and Dye & Durham filed a legal action accusing Proud and Plantro of violating the July cooperation agreement and undermining the review with “misleading statements” about its finances.
This week brought another governance shake-up. The company named veteran dealmaker Alan Hibben as independent chair and added CEO George Tsivin to the board, according to a statement Thursday. Three directors resigned, including Engine Capital’s Arnaud Ajdler. The changes come as Dye & Durham prepares for a Dec. 31 annual meeting and looks to repair its deteriorating financials.
Plantro told the board it’s prepared to sign a binding agreement immediately with no additional due diligence, according to the people.
Under the proposal, shareholders would receive C$3.50 in cash at closing, with the remaining C$2.22 paid in new senior unsecured notes yielding 15% — though only a third of that interest would be payable in cash, the people said. Plantro also offered a go-shop period, allowing the board to sign a deal quickly while continuing to solicit higher offers.