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PC Docs rejects Open Text merger bid

The board, in a statement, calls Open Text's offer unacceptable, opportunistic, and one-sided.

Kim Girard
Kim Girard has written about business and technology for more than a decade, as an editor at CNET News.com, senior writer at Business 2.0 magazine and online writer at Red Herring. As a freelancer, she's written for publications including Fast Company, CIO and Berkeley's Haas School of Business. She also assisted Business Week's Peter Burrows with his 2003 book Backfire, which covered the travails of controversial Hewlett-Packard CEO Carly Fiorina. An avid cook, she's blogged about the joy of cheap wine and thinks about food most days in ways some find obsessive.
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Kim Girard
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Open Text is going to need a shotgun if it wants to marry PC Docs.

Toronto-based PC Docs Group today unanimously rejected Open Text's proposal for a merger. The board, in a statement, called Open Text's offer unacceptable, opportunistic, and one-sided.

"The consideration offered under the Open Text proposal is inadequate, the structure ill-conceived, and the currency of the proposed transaction of questionable value," PC Docs Chairman Ben Swirsky said.

Waterloo, Ontario-based Open Text offered PC Docs shareholders one share of Open Text stock for each four shares of PC Docs common stock, a transaction worth about $106 million. Open text claimed the offer is 35 percent greater than the current value of PC Docs shares based on Monday's closing price of $3.31 per share. Open Text closed at $18.31 per share.

But PC Docs, a document software maker that posted $136 million in revenue in 1998, called the exchange ratio "woefully deficient," charging that the offer "significantly undervalues PC Docs Group."

After a study of the deal, PC Doc's commissioned analysis firm CIBC Wood Gundy Oppenheimer also deemed the exchange ratio "completely unacceptable."

In addition, PC Docs said the company had concerns regarding Open Text's long-term ability to compete against Microsoft and IBM's Lotus.

Through Open Text's offer, made a week ago, the company was hoping PC Docs would be able to extend its document management software to the Internet using Open Text's LiveLink software.

Open Text could not be reached for comment on whether the company will continue to pursue the deal with a more lucrative offer or even a hostile bid.