OpenText, the Canadian software company specialized in document management in its EIM (Enterprise Information Management) solutions, negotiated in August the purchase of the British company SaaS Micro Focus for $5.8 billion. The acquisition took place on January 31 and has led to the dismissal of several of its employees.
With this merger, which has received the approval of all the competent regulatory bodies and its shareholders, OpenText will achieve reduce combined entity teams by 8% and they will work together to devise the digital fabrics of the future. In the words of its CEO and CTO, Mark J. Barrenecheathe reception of Micro Focus customers, partners and employees is a boost for the future of the company in the sector.
The financing for the start-up of the operation arrived and was accounted for in about $4.6 billionin terms of new debt. To these are added 1.300 million in cash and a withdrawal of 600 million of the revolving credit line which owns OpenText.
The critical economic situation that the technology sector is currently going through and that is leading to numerous layoffs of personnel in recent weeks has not gone unnoticed by both entities. sticking to one cost synergylayoffs will result in 400 million dollars.
It must be taken into account that between OpenText and Micro Focus they have 25,000 employeesalthough before its merger, the British company had more than 11,000 workers in 48 different countries and registered $2.9 billion in revenue during 2021. OpenText billing in 2022 was $3.5 billionwith 14,800 employees.
The purchasing power of OpenText
Since its foundation at the University of Waterloo in 1991, OpenText has established itself as an integrated information management platform for companies, joining different companies as the main strategy, but always in a structured and disciplined way. that was how bought GXS for 1.06 billion euroswhich added B2B integration and cloud-based fax services to its products, or ZIXwhich bought it in 2021 for $860 million.
The OpenText stock price has fallen by 26% over the last year, after being valued in February 2022 at $60. It will shortly announce its fiscal results and forecasts for 2023 to all its shareholders.
The bargaining power of Micro Focus
Not only has OpenText based the growth of its business on the purchase of other allied companies, but Micro Focus has done the same throughout its professional career. This was how it was done with various legacy software companies from 1998 such as Borland, Novell Y Cobol-IT. In 2019 they bought Interseta cybersecurity startup based in kanata. They did something similar with the HPE software division, which was parallel in time to the acquisition of Documentum (a division of Dell EMC) by OpenText.
The company was established in 1978 to provide software solutions for identity access and security, IT operations development and management, networking, and host connectivity. Despite its position on the London Stock Exchange since 2005 and the acquisition of various companies, Micro Focus has experienced great difficulties in recent years.
It should be noted that after its merger with hewlett packard in 2017 for 8.8 billion dollars, the British company saw its shares plummet a year later by 46%. This led him to sell his subsidiary suse a TEQ partners for $2.5 billion after buying it in 2014.
From OpenText they hope that Micro Focus will help itself OpenText Business System to create stronger operations and significant cash flows, in turn benefiting their clients from the public and private clouds of the Canadian. This merger will modernize the pervasive legacy software systems in the enterprise IT environment.
