Dye & Durham Buys TELUS Financial Solutions Business

Dye & Durham (DND), a provider of cloud-based solutions for legal firms, has announced it has acquired TELUS’ Financial Solutions Business and certain assets of TELUS Corporation (T) for C$500 million.

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Digital Infrastructure, Technology Solutions

TELUS’ Financial Solutions Business connects all major Canadian financial institutions to the legal profession, providing a seamless way to receive mortgage instructions and discharge mortgages through its web-based software.

The acquisition is highly complementary to that of Dye & Durham, as TELUS’ financial solutions business has a long history of working with the Canadian financial community. It will benefit Dye & Durham customers through expanded product capabilities, particularly in the real estate value chain.

While the acquisition multiple is not disclosed, Dye & Durham believes that it will be able to achieve post-synergy returns that are consistent with the company’s targeted return model.

The company has closed its previously announced C$1.8-billion senior secured credit facility. It used it to repay other debt and finance the TELUS acquisition, with the remaining amount to be used to finance its continued acquisition strategy, among other things. (See Insiders’ Hot Stocks on TipRanks)

CEO Commentary

Dye & Durham CEO Matt Proud said, “This transaction is consistent with our growth strategy, adds significant scale within our current Canadian business, and is very well suited for our proven “acquire and integrate” playbook. Additionally, this acquisition expands our capability by adding the largest non-bank payment platform in Canada, processing 140 million bill and tax payments and moving an aggregated value of over C$1.3 trillion annually, in partnership with financial institutions, billers and government agencies.”

Wall Street’s Take

Last month, Raymond James analyst Stephen Boland maintained a Buy rating on DND with a C$63 price target. This implies 50% upside potential.

The rest of the Street is bullish on DND with a Strong Buy consensus rating based on four Buys and one Hold. The average Dye & Durham price target of C$54.40 implies 29.5% upside potential to current levels.