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Open Text buys Hummingbird – end of story?

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.

2 replies on “Open Text buys Hummingbird – end of story?”

As promised in their open letter from OpenText to Hummingbird legal customers,
the combined entity must improve a much broader and better portfolio of products and services within a short time scale. If not, there is nothing to stop Legal IT directors looking for alternative solutions as their next DMS upgrade.
There are reports Microsoft is working on their next version of DMS and SharePoint systems, and if this would give a easy transition and better portfolio, there will be tough competion between present ECM vendors.

For reader's interest, I post below the letter from OpenText to Hummingbird Legal Clients:
http://www.opentext.com
An open letter from Open Text to Hummingbird
customers in Legal
August 11, 2006
Dear Valued Hummingbird Customer,
On August 4, 2006, Open Text and Hummingbird announced that they have reached an agreement whereby Open Text will acquire Hummingbird in a transaction valued at approximately US$489 million, or US $27.85 per share. Subject to the receipt of shareholder and other approvals, we expect the deal will close in early
October.
Over the years, Hummingbird has always focused on you the customer by delivering first class solutions, service and support. It is this dedication to its customers and its complementary product and solution portfolio that makes Hummingbird a perfect addition to the Open Text family as we share the same values.
Once the transaction is complete, the combined entity will be the largest independent global ECM vendor, and will be able to serve your ECM needs with a much broader portfolio of products and solutions.
Hummingbird’s position in the legal market was one of the key strategic factors behind this transaction. We recognize the tremendous value Hummingbird Enterprise™ for Legal, including the LegalKEY product suite, brings to the legal marketplace. As such, we expect these offerings to become valuable components of the Open Text portfolio and we intend to continue to support, innovate and further develop these offerings to better serve the needs of the legal community. In addition, the combined entity will have a strong development team with the capability of delivering innovative products and solutions to address your specific business needs.
With your continued support and commitment, we are confident that the combined company will continue to be a leading solutions provider to the legal market, providing you with the best products, solutions, service and support to address your most pressing business issues.
Regards,
John Shackleton
President, CEO
Open Text Corporation

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