Canadian software firm Dye Durham Ltd. has struck an agreement to buy a payment business from Telus Corp., the company's first deal since a proposed management buyout was scrapped in October.
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The acquisition of Telus Financial Solutions for C $500 million will give Dye Durham control of the software that handles about 140 million bill and tax payments a year. The Toronto-based company is buying technology that connects Canadian banks and other lenders with law firms when a new mortgage is being arranged or an existing one is discharged.
Dye Durham rose 2.8% to C $39.75 as of 9: 48 a.m. in Toronto.
Matt Proud, Dye Durham's chief executive officer, said the company plans to use Telus payments infrastructure to help move money on residential real estate deals. It is currently used to help process home sales in a Canadian province, Quebec. He said that by cutting down paperwork, real estate transactions will be more efficient across the country.
On most housing transactions you are talking about stacks of paper, many checks cut on every transaction and couriered. Proud said in an interview that it is highly inefficient and prone to fraud. We're going to drive a lot of value for our customers in the future, together with what we do. Dye Durham went public in July 2020 at C $7.50 a share and became one of Canada's standout initial public offering of the year, rising above C $50 by year-end. The firm sells software and databases to the legal industry to help lawyers complete real estate transactions, corporate filings, wills and estates, and other services.
A group of executives including Proud proposed taking the company private for C $50.50 a share when the stock declined earlier this year. One of the largest shareholders, Mawer Investment Management Ltd., joined together with other investors to deny the idea.
Proud said that the board went through a very robust process. A large number of shareholders didn't want to sell at that price at the end of the day. Dye Durham has been criticized by some members of the legal profession for imposing large price increases on software used to help process home purchases and financings. According to a report in the Globe and Mail newspaper, the company told 1,000 firms in British Columbia that they would raise the fees on one particular software product by as much as 563%.
Proud said the higher prices reflect the value of the efficiency that law firms get from Dye Durham products. As this acquisition shows he continues to invest significantly in improving our customers' experience and ability to do their job better, he said.
The Canadian Imperial Bank of Commerce was the financial adviser to Dye Durham on the Telus deal and Goodmans LLP was the legal adviser.
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