OpenText to Divest Application Modernization and Connectivity (AMC) Business to Rocket Software for $2.275B

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Open text to focus on cloud and AI opportunities in data management

Waterloo, lit, November 28, 2023 /PRNewswire/ — Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX), today sold its AMC business to Bain Capital portfolio company (“Rocket Software”) to Rocket Software, Inc. 2.275 billion dollars in cash. OpenText’s AMC business provides market-leading mainframe modernization and connectivity software that enables more than 10,000 customers to run mission-critical business applications in hybrid cloud environments. Benefits of the transaction include:

  • It strengthens and expands OpenText’s focus on cloud and AI
  • More predictable growth results
  • Increases focus on cloud growth opportunities
  • Accelerate the benefit plan, expect a 3x leveraged net leverage ratio(1) Within 90 days of closing
  • Open-ended returns to capital flexibility, including potential future buybacks

The growth opportunities for information management have never been better. We are transforming our mainframe business to focus exclusively on the powerful cloud and AI opportunities in data management. This diversification allows us to move faster in high organic growth areas like cloud capabilities and AI, strengthens our target to deliver our balance sheet ahead of schedule and returns the company to capital flexibility. This separation supports our focus on creating value for our shareholders.


Mark J. Barrenechea, OpenText CEO and CTO

About the transaction:

  • $2.275B All cash purchase price before taxes and fees
  • Approximately 4.6x the sales price of the AMC F’23 revenue $500 million(2)
  • Approximately 8.3x AMC’s F’23 adjusted EBITDA sales price $275 million(2)
  • Net income is to be applied to reduce debt, purchase term loans and term loans.
  • Expect to close at the end of OpenText’s fourth fiscal quarter June 30, 2024Subject to regulatory approvals and customary closing conditions

The combination of AMC and Rocket Software’s highly complementary product portfolios creates one of the world’s largest IT and mainframe modernization and communications software companies. Under the terms of the agreement, the software, associated services and approximately 750 AMC employees will be integrated with Rocket Software.

Until closing, OpenText and Rocket Software will continue to collaborate constructively to protect customer investments and expand offerings for mutual customers.

Goldman Sachs & Company LLC is serving as exclusive financial advisor to OpenText. Cleary Gottlieb Steen & Hamilton LLP is acting as legal counsel to OpenText.

Conference call information

The public is invited to tune in to the OpenText conference today at 5:00 PM ET (2:00 p.m. PT). For quick access to a conference call, use the following: Link call me. Alternatively, call 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 call 15 minutes in advance to ensure correct connection. Alternatively, the conference call can be webcast live on the Investor Relations section of the Company’s website at http://investors.opentext.com/investor-events-and-presentations.

The callback is available at the beginning. November 28, 2023 as if 6:30 p.m. ET Through 11:59 p.m on December 12, 2023 And you can get the code by calling 1-855-669-9658 (toll free) or +1-604-674-8052 (international) and using the passcode 0572.

More information is available at our event. https://investors.opentext.com.

About OpenText

OpenText, The Information Company™, enables organizations to gain insight through market-leading information management solutions powered by OpenText Cloud Editions. For more information about OpenText (NASDAQ: OTEXTSX: OTEX) Visit opentext.com.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this press release, including statements about OpenText Corporation (“OpenText” or the “Company”) regarding the market size of the business and its benefits to its customers, including the timing of the transaction; The benefits of the transaction include strengthening and expanding OpenText’s focus on cloud and AI, enabling predictable growth, increased focus on cloud growth opportunities, balance sheet consolidation, accelerated delegation planning and increased future capital flexibility, including future stock purchases, data management growth prospects; Cloud and ARR growth; Creating value for shareholders; Use of the proceeds from the transaction; the ancillary nature of the businesses; A desire to cooperate to protect customer investments and expand offerings; Projected financial information and other matters, including “expects”, “expects”, “intends”, “plans”, “believes”, “wills”, “estimates”, “may”, “could”, “may”, “Authorization” and variations of these terms or similar expressions are intended to identify forward-looking statements or information under applicable securities laws (forward-looking statements). In addition, statements or information that refer to expectations, beliefs, plans, projections, intentions, performance or other future events or conditions, including any fundamental assumptions, are forward-looking statements and are based on our current expectations, projections. and forecasts about the operating environment, economy and markets in which we operate. Forward-looking statements reflect our current assumptions, beliefs and assumptions based on management’s understanding of historical trends, current conditions and future developments, including certain assumptions about the economy that it believes are appropriate under the circumstances. , as well as market, financial and operational assumptions. Management’s estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and future events, and as such are subject to change. We can give no assurance that such estimates, beliefs and assumptions are correct. Future share purchases are also subject to the final decision and discretion of the Board of Directors as well as regulatory approvals. Forward-looking statements involve known and unknown risks and uncertainties such as: receiving regulatory approvals and achieving customary closing conditions for the transaction; All disclosures, including expected financial position, results of operations, cash flows, dividends, future stock repurchases, financial plans, business strategy, budget, capital expenditures, competitive positions, growth opportunities, plans and management objectives, any anticipated joint venture benefits; our ability to successfully close the business and complete the transaction, including unexpected costs, delays or difficulties, and our ability to develop, maintain and protect our intellectual property and proprietary technology and to operate without infringing the proprietary rights of others; We rely on copyright, proprietary, trademark and trade secret laws, nondisclosure agreements and other contractual provisions to establish and protect our proprietary rights that are essential to our success. From time to time, we enforce our intellectual property rights through litigation consistent with our strategic and business objectives. Actual results that OpenText achieves may differ from any forward-looking statements. See the company’s annual report on Form 10-Q, quarterly reports and other securities filings with the Securities and Exchange Commission (SEC) and other securities regulators for information on potential risks and other conditions. Readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date specified. Except as permitted by applicable securities laws, the Company disclaims any intention or obligation to revise or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, our readers should note that we may communicate information using social media channels identified on our website, press releases, securities filings, public conference calls, our website and the investor section of our website.https://investors.opentext.com). Such social media channels may include the Company’s or our CEO’s blog X, formerly a Twitter, account or LinkedIn account. The information posted in such channels may be material. Accordingly, readers should monitor such channels in addition to other means of communication.

Non-GAAP financial measures

This press release includes certain non-GAAP measures. Please see the Company’s “Reconciliation of Selected GAAP-Based Measures to Non-GAAP Measures” in the Company’s current and historical filings 10-K, 10-Q and 8-K for more information on the use of non-GAAP measures. – GAAP measures by the company.

Note: All dollar amounts in this press release are in dollars unless otherwise noted.
(1) Consolidated net leverage ratio (pro forma) is calculated using the bank covenant method.
(2) Amounts reflect AMC’s estimated unaudited historical pro forma revenues and Adjusted EBITDA for OpenText’s fiscal 2023 period ended June 30, 2023. for the session July 1, 2022 to the January 31, 2023 The unaudited historical pro forma results are presented in accordance with International Financial Reporting Standards (IFRS) and in the results. February 1, 2023 to the June 30, 2023 They are presented on the basis of united states Generally Accepted Accounting Principles (US GAAP). Estimated unaudited historical pro forma revenues and adjusted EBITDA amounts do not include adjustments to change IFRS results from the period. July 1, 2022 to the January 31, 2023 to US GAAP.

OTEX-MNA

Copyright ©2023 OpenText. OpenText is a trademark or registered trademark of OpenText. The list of trademarks does not include other trademarks. Registered trademarks, brand names, company names, trademarks, and service names are open-text properties referenced herein. all rights reserved. For more information visit: http://www.openttext.com/who-we-are/copyright-info.

Source Open Text Corporation



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