(Bloomberg) -- Canadian software firm Dye & Durham Ltd. reached an agreement to give a board seat to one of its largest shareholders as it tries to fend off a campaign by activist investors.
Blacksheep Fund Management Ltd. will have the right to name one board member and has agreed to “voting support and other customary terms,” Dye & Durham said in a statement. The Dublin-based investment manager owns about 6% of the company.
“We look forward to continuing to work collaboratively with Blacksheep and our other constructive stakeholders to execute on our strategy,” Chief Executive Officer Matt Proud said in a press release Tuesday.
Dye & Durham, which provides software and services to the legal and banking sectors, went on an acquisition spree after a successful initial public offering in 2020. But it has had to reconsider its growth strategy because of concerns about high leverage. The shares, which briefly traded above C$50 in 2021, closed last week at C$15.79.
Dye & Durham has hired Goldman Sachs as its financial adviser and Goodmans LLP and Groia & Co. as its legal team.
Last month, another shareholder, Engine Capital Management LP, took issue with Dye & Durham’s decision to execute two deals and asked the company to call a special meeting as soon as possible to allow investors to vote on the board. A meeting has now been set for Dec. 10.
Engine Managing Partner Arnaud Ajdler said his firm was “blindsided” by Dye & Durham’s plans for two acquisitions totaling C$69.3 million ($50.2 million). The transactions go against previous commitments to lower its debt, he said.
Dye & Durham pushed back, saying it’s confident in its ability to execute strategic mergers and acquisitions while achieving debt reduction targets.
The software company “completed two small tuck-in acquisitions, which are expected to exceed the company’s historical returns target without adding any funded debt,” Dye & Durham said at the time, adding that it’s managed to refinance some of its debt on more favorable terms.
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