Waterloo, Ontario-based Open Text is offering around $483m, or $27.75 per share, in cash for Toronto-based Hummingbird.

Hummingbird put itself up for sale earlier this year, and in May 25 Hummingbird announced that it had entered into negotiations to be bought by affiliates of California-based Symphony Technology Group.

But Hummingbird has been under fire from disgruntled investors for not entertaining more bids. Many believe the company is being undersold. In a fiery conference call last month, Hummingbird’s chairman Fred Sorkin was slammed for not soliciting rival bids from other strategic buyers.

Some investors were unhappy with both the bidding process and the price accepted. At the time some analysts called the deal a farce and ridiculous. One even hinted at legal liability for Hummingbird’s board.

The under-fire Sorkin retorted by saying that the company was never on the block and that the board had responded to incoming interest from potential buyers, of which Symphony was the most serious.

But he also pointed out that the door remained open to other bids, saying: If other people want to enter bids they can still do it to.

Investors will certainly be happier with Open Text’s offer, which represents a premium of around 20% of over the closing price of Hummingbird’s share price of $26.75 on the day prior to the Symphony agreement. It also beats Symphony’s offer of $466m, by over a $1 more per share.

Hummingbird had 17.42m shares outstanding at the end of June.

Open Text CEO John Shackleton said that Hummingbird is a strong strategic fit and will expand the breadth of Open Text’s applications and extend the reach of its global partnerships.

Some analysts believe the stage is now set for a fierce bidding war, with Hummingbird’s management team becoming more active in soliciting new or raised bids.

With poor blood between the two management teams, Hummingbird is likely to seek a white knight or a higher bid from Symphony, wrote Desjardins Securities analyst David Shore in an analyst note to investors.

Another analyst, Peter Misek at Canaccord Adams, believes that $29 to $30 is a fair price for Hummingbird’s shares.

Palo, Alto, California-based Symphony said it controls around 20% of Hummingbird.

But Open Text said that it has already locked up around 18% of Hummingbird’s shares for the proposed transaction through deals with individual shareholders. It already owned 4.3% before these agreements, bring its total stake up to 22.3%.

The company said in a statement that investors holding the 18% of Hummingbird’s stock have pledged their support for Open Text’s superior offer.

While the acquisition will certainly be financially accretive, it will be a challenge to integrate both companies operationally and technologically. Both Hummingbird and Open Text have gained reputations in the industry as being serial acquirers and have built up their respective content management suites from a string of acquisitions over several years.

Hummingbird’s entry into the content management space was through its acquisition of PC DOCS Group back in 1990, which it rather ironically bagged after winning a bidding war over Open Text, and RedDot Solutions Corp last year.

Open Text’s last major content management acquisition was a German content management firm Ixos Software AG a couple of years ago. Integration has gone far from smoothly. The geographical proximity of Hummingbird will however make things easier. But the jury is still out whether Open text can generate new revenue from a combination of what seems to be two overlapping technology sets.

The future of Hummingbird’s legacy host connectivity and terminal emulation software business also remains in doubt under Open text’s wing. The same can be said for Hummingbird’s business intelligence and data warehousing (ETL) tools business.

Open Text does not plan to issue equity to complete the deal. Instead it will use loans from a Canadian bank as well as its cash war chest to finance the deal.

Hummingbird’s stock price jumped 4.6% to $28.64, a year high, in the early Nasdaq session following the announcement of Open Text’s bid.