From AFR March 10 1999:
Looming love match sets
Solution 6 on fire
By Helene Zampetakis
Solution 6's pursuit of PC DOCS took another turn yesterday with the announcement that the Canadian software house was planning a love match with Hummingbird Communications - and signs of an unspurned suitor.
Hummingbird yesterday sent notice to Solution 6 of a unanimous decision by both boards to take over PC DOCS in a one-for-three stock swap that valued the company at $US155 million ($247 million) - almost exactly the value placed on it by the Australian suitor.
The announcement failed to shake off Solution 6: it indicated that it might now pursue its target even more ferociously despite having had only cold rejection since its initial proposal to take over the $C200 million ($213 million) Canadian software company five weeks ago.
Solution 6's chief executive, Mr Chris Tyler, said he would explore whether to make a hostile bid for the document manager. "The announcement effectively puts a 'For Sale' sign up," he said.
He also pointed to negative market reaction to the initiative - Hummingbird's shares closed down 4.83 per cent yesterday, although PC DOCS's share price remained unchanged. "The market reaction leaves a window of opportunity for an alternative bid to come to market," he said.
The deal, still subject to regulatory procedures, would create the world's 50th-largest software company with combined revenues of $US240 million. It would place the merged software company into a new niche in the information-access market by combining these tools with knowledge-management systems.
It would also give Hummingbird a foot into the $2 billion knowledge-management market, which is growing at an impressive 50 per cent a year. That compares with the relatively mature $6.3 billion market for information-access tools, which has more modest growth of some 17 per cent, according to PC DOCS' managing director for Australia, Mr Darren Adams.
Mr Adams said the acquisition would be "fantastic" for the two companies, which have their headquarters only blocks away from each other on the same street in Toronto.
Shareholders stand to gain a 38 per cent premium on their stock if the deal goes ahead.
However, Mr Tyler said the companies did not have a clear synergy - Hummingbird's main business was connectivity - and the acquisition did not make sense for shareholders.
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