In-Depth

Hummingbird Versus Its Shareholders and the Acquisition Go-Around

The content management specialist last week agreed to be acquired—for the second time this year, in fact—by an admiring suitor.

• By Stephen Swoyer
• 08/09/2006

Whatever else you might say about Hummingbird Ltd., that most protean, opportunistic, and long-lived of ISVs, you could at least concede that it was a survivor—until last week, anyway.

The Canadian software stalwart, which celebrated its 20th anniversary in 2004, last week agreed to be acquired—for the second time this year, in fact—by an admiring suitor; in this case, by enterprise content management (ECM) specialist Open Text Corp. which ponied up nearly $500 million to cinch the deal.

Hummingbird first made its name—and established its lasting fame—in the legacy access and transformation space, where (to this day) it markets a variety of Windows-to-Unix and Windows-to-host access solutions.

These days, however, Hummingbird is equally well known as a provider of enterprise content management (ECM) software. Its ECM prowess, in fact, has helped make it one of the top 15 BI players—on a revenue basis—according to market watcher International Data Corp., where it leads a litany of (near) household names, including Teradata (a division of NCR Corp.) and the former ProClarity Corp. Its ECM chops also helped make it an attractive acquisition target for Open Text, which—as the number one ECM vendor globally, according to Gartner Inc.—is no slouch in the content management space itself. Hummingbird, too, is ranked in Gartner’s ECM top five, officials say.

Open Text wasn’t Hummingbird’s first choice, however. Just over two months ago, Hummingbird agreed to be acquired by an affiliate of Symphony Technology Group for just shy of $470 million. That deal was a go, pending an August 18th shareholders meeting, but Hummingbird stockholders apparently had second thoughts when Open Text came knocking, even though that company’s $489 million ante isn’t substantially more than Symphony’s offer. On paper, in fact, Open Text’s overture works out to a premium of 4.1 percent over that of Symphony --but Hummingbird must also pony up $11.7 million to gracefully terminate its relationship with Symphony. Call it a wash.

On at least one occasion, Hummingbird’s management seemed less than thrilled with Open Text’s attentions. In late July, for example, the company issued a release in which it called for shareholders to reject Open Text’s “unsolicited” offer. Officials weren’t necessarily holding out for Symphony, however: at the time, they said, Hummingbird was trying to get Open Text to pony up more than the $27.75 per share (and with fewer conditions to boot) it originally tendered. Hummingbird got its wish: Open Text wound up paying $27.85 per share.

This is the second case in less than a year in which a prominent BI (or BI-oriented) vendor has backtracked out of a pending acquisition. Last year, Pitney Bowes Inc. terminated its pending acquisition of the former Firstlogic Inc. after the proposal drew unexpected attention from regulators. Firstlogic, for its part, was snapped up less than three months later by Business Objects SA.

Nor are the Open Text/Hummingbird nuptials a done deal. The transaction must first be approved by at least two-thirds of Hummingbird shareholders, and is also subject to court and regulatory approval.