RealTime IT News

Open Text Buzzing Hummingbird Bid

Determined not to let major market share and customers slip away, Open Text  this week made an informal offer for Hummingbird Ltd. , which is in the process of being acquired by Symphony Technology Group.

Open Text is offering $27.75 per common share, or about $483.5 million in cash for rival Hummingbird, a leading maker of enterprise content management (ECM) software that manages and stores large amounts of corporate data in repositories.

The Canadian ECM vendor's offer is $1 per share greater than Symbol's bid, which totaled about $465 million.

It's also a 20 percent premium over the closing price of the Hummingbird shares on the NASDAQ stock exchange on May 25, the day before Symbol made its proposal for Hummingbird.

Open Text, which did not respond to calls about the timing of its bid, said in a statement it expects to commence a formal offer for Hummingbird by July 15.

Fred Sorkin, chairman of Hummingbird's board of directors, said in a statement today that when Hummingbird receives Open Text's formal bid, it will review the offer and make a recommendation to its shareholders.

Hummingbird must pay Symphony an $11 million break fee if their deal falls apart.

While Open Text is planning its formal offer, the company said it has entered into "lock-up agreements" with Hummingbird shareholders representing 18 percent of the outstanding shares of Hummingbird as of June 19.

Shareholders who entered a lock-up agreement with Open Text agreed to deposit their common shares to the Open Text offer without withdrawing them.

Moreover, Open Text said it owns 4.3 percent of the outstanding common shares of Hummingbird as of June 19, bringing its total to 22.3 percent of the issued outstanding common shares of Hummingbird.

The lock-up agreements underscore Open Text's intentions for Hummingbird.

"We believe this acquisition will benefit the shareholders, customers, partners and employees of both companies," stated John Shackleton, president and CEO of Open Text.

"Hummingbird is a strong strategic fit that adds to our solutions focus and increases the reach of our global partner program."

In the statement, Shackleton noted that size and global reach are important to success in ECM, a multi-billion-dollar market that includes such competitors as leader IBM , Microsoft , EMC , Interwoven   and FileNet .

The ECM sector thinned considerably in the last few years, the result of some consolidation among vendors interested in grabbing a larger piece of the lucrative ECM pie.

EMC bought Documentum and Captiva in the past few years.

Open Text is no stranger to the consolidation, buying Ixos Software and a 75 percent stake in Gauss Interprise in 2003.

Open Text's latest proposal recalls bidding wars Oracle has entered into in the past few years, including the database specialist's bids for J.D. Edwards and Retek.

Ultimately, Oracle won J.D. Edwards when it acquired PeopleSoft, and poached Retek from SAP.