Authentidate (NDAQ:ADAT) said Tuesday that it is taking part in negotiations to combine the company with an unnamed, privately held company, according to an 8-K filing with the SEC. The move comes after activist investor Coghill Capital Management sought to restructure the board of directors and work to improve the company's capital structure.

Authentidate, which provides secure enterprise workflow management solutions, is trading well off its 52-week high of $2.61 but appears to be working to turn itself around. The company recently sold off its Document Management and Systems Integration businesses in order to focus more on their core competencies. Meanwhile, the company reported broad success with its new initiatives in domestic healthcare and foreign partnerships. This new merger transaction marks a continued effort to unlock shareholder value.

"While discussions between representatives of the parties continue, the terms of the transaction have not been agreed upon and no letter of intent, term sheet or acquisition agreement of any kind has been executed by either party," said the company in a statment. "Any potential agreement would be subject to the review and approval of the Company’s board of directors."

Coghill Capital Management is an activist investment company that employs a bottom-up fundamental analysis approach to identify companies in the highly inefficient small cap universe. They target small cap companies with specific, time-bound catalysts for stock price movement. The firm has a strong track record in this area and is a great fund to follow - especially in strong positions like these. Combined, these factors make ADAT a stock worth watching!

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