Despite having been described by one analyst as the DMS industry's answer to the Montagues and the Capulets, Hummingbird yesterday announced that it had entered into a definitive agreement pursuant to which a wholly-owned subsidiary of Open Text will acquire all of Hummingbird’s outstanding shares in an all-cash transaction valued at US$27.85 per share – or approximately US$489 million.
The Board of Directors has unanimously approved the transaction and Hummingbird’s board is unanimously recommending that shareholders vote in favour of the transaction. The Open Text deal 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 Symphony Technology for US$26.75 per share, and a premium of 4.1% to the Symphony transaction.
Prior to executing a definitive agreement with Open Text, Hummingbird terminated its arrangement agreement with affiliates of Symphony and, as required by that agreement, paid an affiliate of Symphony a termination fee of approximately US$11.7 million. The special meeting of Hummingbird’s shareholders to consider the Symphony transaction that was scheduled for August 18, 2006 has been cancelled. The transaction is to be carried out by way of a statutory plan of arrangement and will be subject to the approval of two-thirds of the votes cast by Hummingbird’s shareholders at a meeting of shareholders, currently expected to be held in late-September, as well as court approval. The transaction is also subject to certain other customary conditions, including the receipt of regulatory approvals. The proposed transaction is expected to close in early-October, shortly after receipt of shareholder and court approvals. Hummingbird expects to send an information circular relating to the transaction to shareholders later this month.
So… end of story and a happy outcome for Hummingbird shareholders? Well maybe however we are hearing that some of Hummingbird's competitors in the legal DMS market – notably Interwoven – see this as Christmas coming early for them. They believe it will open up the market to all those older Hummingbird sites who will now one day be faced with a choice of whether to stick with Hummingbird – and then have to migrate to whatever successor system Open Text cares to offer – or switch to the market leader Interwoven. We live in interesting times a number of law firm IT directors could soon face some potentially career wrecking decisions over the choice of their next document management system.