Two years after going public and seeing its business value melt by more than half, Montreal telemedicine specialist Dialogue accepts a buyout offer from its largest shareholder, Sun Life Financial.
The management of the virtual care platform announced on Wednesday that it had said yes to a proposal of $5.15 per share, valuing Dialogue at 365 million. The price offered by insurer Sun Life – which owns 23% of Dialogue’s shares – represents a 43% premium to the $3.60 price recorded Tuesday at the close of trading on the Toronto Stock Exchange.
Dialogue listed its shares on the stock exchange in the spring of 2021. The initial share price was then set at $12. The stock had quickly appreciated to $20 before falling as low as $2 in recent months.
The announced sale transaction is the result of a strategic review process launched last fall.
The big boss and co-founder of Dialogue, Cherif Habib, explains in an interview that the market had been “tough” for a few years and that the company wanted to make sure it was doing “the best thing” for its shareholders.
National Bank led the strategic review process.
“The most important thing is to look to the future and not the past,” says Cherif Habib. In today’s market environment, getting a 43% shareholder premium is a good result. »
Dialogue and Sun Life have had a relationship for three years. Not only had Sun Life acquired shares of Dialogue, but recently it was also helping the company gain exposure in the United States. Earlier this month, a deal was struck to offer Dialogue services to Sun Life customers south of the border.
The takeover offer is deemed “fair” by analyst Jérôme Dubreuil, of Desjardins Securities, given the declining interest in the market for technology companies in the health sector.
According to this expert, the agreement proves that the industry still has great value, but demonstrates how difficult it is to thrive in the health sector as a relatively small company.
Cherif Habib says Dialogue will remain an independent entity within Sun Life and that the company will keep all of its employees (nearly 1,000) at its Montreal headquarters.
“Our five-year business plan is not changing. We will continue to offer our services through our partners such as Canada Life, Industrial Alliance and others,” said Cherif Habib.
Furthermore, no cost reduction measures are envisaged. “On the contrary, says Cherif Habib, we want to continue investing to grow the company. »
The 41-year-old Egyptian-born entrepreneur is optimistic about the future with a shareholder with a long-term vision. “It will allow for decision-making with fewer distractions from quarter to quarter.” »
Looking back, Cherif Habib admits that Dialogue’s initial public offering could hardly have come at a better time.
“We had excellent timing. We went to the markets at the peak of the previous cycle. We raised $100 million at the best time we could have hoped for. This is the best decision we could have made in March 2021. The capital market has since changed. »
Despite the backlash from investors since the IPO, he says he is proud of the performance of Dialogue, which he says has improved its results by increasing its revenue and decreasing its losses. “We are unfortunately in a different market cycle on the stock market,” he said.
“Being part of the Sun Life family will give us a lot of resources and opportunities for growth through acquisitions and otherwise. »
In seven years of existence, Cherif Habib says that Dialogue has so far been a good partner for the health system in Quebec and Canada. “We have eased the pressure on the system. »
The sale to Sun Life must be approved by two-thirds of the votes cast by shareholders as well as a majority of the votes cast by shareholders other than Sun Life and members of Dialogue’s management (2.6%).
The third-largest shareholder at Dialogue with a 9% stake, the Caisse de dépôt et placement du Québec says it has read Sun Life’s offer and intends to examine it in view of the shareholders’ meeting.