OpenText reveal surprise Hummingbird acquisition

Hummingbird locked-up as content management vendor market shrinks

By Mark Chillingworth, Information World Review 06 Jul 2006

OpenText has shocked the information management industry by announcing it plans to acquire major rival Hummingbird. The enterprise content management application vendor has entered into a Lock-Up Agreement with Hummingbird shareholders. Just one month ago Hummingbird revealed it was to be acquired by venture capitalists, but now OpenText plans to scupper the deal and create a single ECM behemoth.

OpenText is offering $27.75 per common share to the shareholders of Hummingbird . "We believe this acquisition will benefit the shareholder, customers, partners and employees of both companies," said OpenText president John Shackleton. OpenText will finance the take over through a cash loan from a leading Canadian chartered bank.

A Lock-Up Agreement with the shareholders means Hummingbird shareholders agree to a deposit from OpenText and not to withdraw from the deal. According to OpenText shareholders have agreed to the deal, which is a superior offer to the Symphony Technology Group deal revealed by IWR in the June issue. The offer from OpenText is 20% higher than the Symphony deal.

OpenText has also announced its preliminary fourth quarter financial results, ending June 30, 2006. Revenue for the quarter is expected to be between $100m and $110m. "Last year we returned to our established operating model for profitability," Shackleton said.

OpenText plans to complete its submission for the acquisition by July 15.

Last month Hummingbird announced that by selling out to Symphony it was moving from being a publicly listed company to a private company, which would provide it with the freedom to develop new technology and business strategies. If the OpenText deal is completed, it could mean the disappearance of one of the largest ECM players and an uncertain future for its divisions such RedDot, the web content management provider.

Tony Heywood, EMEA senior vp at Hummingbird said of the Symphony acquisition: "The deal is about being in the best position to take advantage of opportunities in the market ."