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."
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.