Activist Blue Harbour Says Open Text Can Boost Value Via M&A

(Bloomberg) -- Activist investor Blue Harbour Group called Canadian software company Open Text Corp. “mispriced and inexpensive” and said it could be worth at least 50 percent more if it were to do a transformational transaction or sell itself.

“This is a very high quality business,” said Cliff Robbins, Blue Harbour’s chief executive officer, at the 13D Active-Passive Investor Summit in New York Tuesday. “This team knows how to do deals and we’re going to help them.”

Blue Harbour, which owns a 3.5 percent stake in Waterloo, Ontario-based Open Text, also plans to help the company increase its U.S investor base and encourage management to pursue buybacks and increase dividends. The activist disclosed a stake in Open Text last May.

“There’s always a potential strategic sale down the road,” Robbins said.

Shares of Open Text rose 3.5 percent at 10:25 a.m. in New York, the most since Feb. 1, valuing the company at C$12 billion ($9.5 billion).

Open Text has a strong track record of mergers and acquisitions and is sitting on about C$1.2 billion in dry powder for potential deals, he said. The company has bought at least 13 companies since the start of 2016, according to data compiled by Bloomberg.

“As their lead stockholder, we plan to work with them to get this money to work,” Robbins said.

Greenwich, Connecticut-based Blue Harbour typically agitates for shareholder-friendly changes behind the scenes, shunning hostile tactics such as proxy fights and lawsuits. The fund rarely speaks publicly about its campaigns.

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