Shares rise as Dye & Durham considers sale, merger, or other transactions, though no deal is certain
Dye & Durham Ltd., a Canadian legal software firm, is exploring a possible sale following takeover interest, according to BNN Bloomberg.
The Toronto-based company, which has faced pressure from activist investors, confirmed that it is working with advisers on a strategic review.
This process could lead to a sale, merger, or other transactions, though Dye & Durham cautioned that a deal is not guaranteed.
Goldman Sachs is assisting Dye & Durham in managing interest from potential suitors, including US-based private equity firms and strategic companies, according to an unnamed source familiar with the discussions.
Following Bloomberg's report, shares of Dye & Durham jumped by as much as 11.1 percent, hitting $18.78, the highest intraday level in over a year. The stock closed at $18.50, up 9.5 percent from the previous trading day.
The company, which provides software and services to the legal and banking sectors, had been on an acquisition spree after its 2020 initial public offering.
However, concerns over high leverage have forced Dye & Durham to reconsider its growth strategy. As of June 30, the company held more than $1.5bn in long-term debt.
Dye & Durham's shares, which once traded above $50 in 2021, closed Monday at $16.90, giving the company a market valuation of $1.13bn. The firm's revenue for the fiscal year ending June 30 totalled $457.7m.
Last year, Dye & Durham enlisted Goldman Sachs and Canaccord Genuity Group Inc. to advise on the potential sale of noncore assets, including its financial services division.
Recently, Dye & Durham agreed to give a board seat to Blacksheep Fund Management Ltd., one of its largest shareholders, in an effort to address activist investor concerns.
However, Engine Capital LP, which owns approximately 7.1 percent of the company's shares, announced last week that it intends to pursue further boardroom changes and will propose its own slate of director candidates at the upcoming annual meeting.
Company representatives declined to comment on the current situation.
