November 28, 2023
OpenText to Focus on Cloud and AI Opportunity Within Information Management
WATERLOO, ON, Nov. 28, 2023 /PRNewswire/ -- Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX), today announced that it has reached a definitive agreement to divest its AMC business to Rocket Software, Inc., a Bain Capital portfolio company ("Rocket Software"), for US$2.275 billion in cash. OpenText's AMC business provides market leading mainframe modernization and connectivity software to more than 10,000 customers enabling them to run mission-critical business applications in hybrid cloud environments. Benefits of the transaction include:
- Reinforces and expands OpenText's focus on Cloud and AI
- Results in more predictable growth
- Increases focus on cloud growth opportunities
- Accelerates de-leverage plan, expect to be under 3x Consolidated Net Leverage Ratio(1) within 90 days of closing
- Returns OpenText to capital flexibility, including potential future share buybacks
| The growth prospects for Information Management have never been better. We are divesting our mainframe business so we can singularly focus on the powerful Cloud and AI opportunities within Information Management. This divestiture will better position us to move with more speed in higher organic growth areas such as Cloud capabilities and AI, strengthens our balance sheet to achieve our deleveraging targets ahead of schedule and returns the company to capital flexibility. This divestiture supports our focus on creating value for our shareholders." |
| Mark J. Barrenechea, OpenText CEO & CTO |
About the Transaction:
- $2.275B all-cash purchase price before taxes and fees
- Sale price of 4.6x AMC's F'23 revenue of approximately $500M(2)
- Sale price of 8.3x AMC's F'23 Adjusted EBITDA of approximately $275M(2)
- Net proceeds to reduce debt, to be applied to the Acquisition Term Loan and Term Loan B
- Expect to close in OpenText's fourth fiscal quarter ending June 30, 2024, subject to regulatory approvals and customary closing conditions
The combination of AMC and Rocket Software's highly complementary product portfolios will create one of the world's largest IT and mainframe modernization and connectivity software companies. Under the terms of the agreement, the software, associated services, and approximately 750 employees of AMC will be integrated into Rocket Software.
Until closing, OpenText and Rocket Software will continue to constructively collaborate to protect customer investments and expand offerings for joint customers.
Goldman Sachs & Co. LLC is serving as sole financial advisor to OpenText and Cleary Gottlieb Steen & Hamilton LLP is acting as legal advisor to OpenText.
Conference Call Information
The public is invited to listen to the OpenText conference call today at 5:00 p.m. ET (2:00 p.m. PT). For instant access to the conference call use: Call Me Link. Alternatively, dial one of the following numbers to join the queue to speak with an operator: 1-800-319-4610 (toll-free) or +1-604-638-5340 (international). Please dial-in 15 minutes ahead of time to ensure proper connection. Alternatively, a live webcast of the conference call will be available on the Investor Relations section of the Company's website at http://investors.opentext.com/investor-events-and-presentations.
A replay of the call will be available beginning November 28, 2023 at 6:30 p.m. ET through 11:59 p.m. on December 12, 2023 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 0572 followed by the number sign.
More information can be found in our presentation at https://investors.opentext.com.