Former Dye & Durham CEO Matthew Proud, pictured outside his Toronto office in September, on Wednesday made his third bid for the company this year.DUANE COLE/The Globe and Mail
The Proud brothers have launched separate attempts to change the course of embattled Dye & Durham Ltd. DND-T, a company they built together before a bitter falling out over leadership and strategy. Their latest efforts echo attempts each has made before.
Matt Proud, former chief executive officer of the legal software company that bulked up through debt-fuelled acquisitions before he lost the confidence of shareholders, made his third bid for D&D of the year on Wednesday.
He offered to take D&D private for $20 a share in February through his holding company Plantro Ltd., then for $10.25 this fall. The latest bid, sent to the board, is for $5.72 a share – $3.50 in cash on closing and $2.22 of senior unsecured notes. The bid values D&D’s equity at $385-million.
Matt Proud tried to privatize D&D in 2021, months after it went public at $7.50 a share. The board rejected his $50.50-a-share management buyout bid, instead offering him a rich pay package that incensed shareholders and led to the exit of two board members. It sparked broader discontent that activist Engine Capital LP tapped into when it launched an ultimately successful effort in 2024 to overhaul D&D’s board. Bloomberg first reported on the new bid.
Mr. Proud’s brother Tyler, D&D’s onetime chairman, was among dissatisfied shareholders who supported Engine’s campaign, which hastened Matt Proud’s exit as CEO last December.
Now, after losing confidence in Engine’s board, Tyler Proud has proposed his own slate for next month’s annual meeting. He is one of the five nominees that his private company, OneMove Capital, has proposed for the seven-member board.
The others are U.S.-based David Foster Giannetto, ex-CEO of payroll service provider Netchex; Edward Smith, CEO of the Electronics Representatives Association; former D&D director Ronnie Wahi; and Allen Taylor, former chief financial officer of Brookfield Asset Management.
Tyler Proud had tried to negotiate with the board to accept his slate rather than launch a proxy fight. Instead, three directors resigned Thursday, including Engine founder Arnaud Ajdler, the chairman, and Eric Shahinian, Tyler Proud’s nominee under a shareholder rights agreement. Joining the board is Bay Street veteran Alan Hibben, who becomes chairman, and recently hired CEO George Tsivin.
Tyler Proud said in a statement Thursday that the departing directors had overseen rising costs and “reckless decisions” and accused them of “vanishing six weeks before the AGM in a calculated bid to dodge accountability.” He called on the rest of the board to resign.
Tyler Proud is effectively launching a proxy fight before the company has even sent its circular to shareholders. Ex-D&D chief operating officer Martha Vallance has also told the board that she plans to run.
The latest developments add to what has been a tumultuous year for D&D. It has less than a month to file its delayed audited financial statements for its most recent quarter or it will be in default under its senior credit agreement.
D&D is also pursuing a second extension from the Ontario Securities Commission after failing to file its annual filings on time for its fiscal year ended June 30.
D&D this month reported disappointing preliminary unaudited results for last year and the first quarter. Last month, S&P Global Ratings and Moody’s Ratings cut their credit ratings on the company. The board faced criticism earlier this year after the process to hire a new CEO dragged on and it rehired then quickly fired a former chief financial officer.
The stock has crashed several times in recent weeks, including after CIBC Capital Markets had backed out of leading a strategic review that could lead to the company’s sale. After closing at an all-time low of $2.71 Thursday, the stock opened up 29 per cent Friday on news of the bid.
Matt Proud’s holding company said its latest offer would not trigger a change of control under the senior debt or its convertible debentures undertakings, and questioned how D&D could effectively pull together a conventional sale process given recent management turnover. Plantro’s bid would only involve “very limited due diligence,” it said, and it has access to the cash to fully fund its offer.
Plantro is offering to enter into a binding, definitive agreement immediately, saying its bid offers “a very attractive multiple” for the challenged company.
Mr. Proud led his own activist campaign against D&D earlier this year, agreeing to back off in July when the company reached a standstill deal with Plantro. D&D has since accused him of launching a “creeping” takeover backed by his brother and Mr. Wahi.