Open Text Acquires Cloud Integrator GXS in Billion-dollar Deal

Posted by Jacob Serebrin

Waterloo-based Open Text Corporation has acquired GXS Group for US$1.165 billion, the company announced on Tuesday morning.

The deal will see the business software company pay $1.065 billion in cash and $100 million worth of common shares for the Maryland-based business-to-business cloud integration company.

“GXS is the market leader in B2B integration services,” said Open Text’s president and CEO Mark Barrenechea during a conference call with investors. “It is the engine room of commerce. This is where companies manage their transactions with their trading partners.”

GXS’s Trading Grid is a cloud-based solution that helps businesses share information and conduct deals. According to Barrenechea over 14 billion transactions were conducted over the GXS Trading Grid last year.

GXS is currently owned by private equity firms Francisco Partners, Golden Gate Capital Management, and Cerberus Capital Management. Francisco Partners acquired the company from General Electric in 2002 for $800 million. In July, the private equity firm said it was considering refinancing the company in anticipation of an IPO.

According to Barrenechea, Open Text’s interest in the B2B integration market began in May 2012, when it acquired EasyLink.

“We very much liked the space,” he said. “GXS was in a process in late spring, early summer and we participated in that process.”

Open Text plans to integrate the company’s software into their platform within two years. According to Barrenechea, the two companies combined will have over 80,000 customers.

The acquisition will allow Open Text to add GXS’s B2B integration software and managed services to its enterprise information management offerings. It will also allow the company to strengthen its international presence and expand its enterprise information management services to procurement, supply chain and accounting.

GXS currently has 2,889 employees in 20 countries and counts 50 per cent of the Fortune 1000 among its customers. GXS had $487.5 million in revenue last year.

According to Barrenechea the B2B integration market is worth around $6 billion. The deal is being financed through $800 million in loans from Barclays and RBC.

Capital Markets and is expected to close within 90 days. Open Text shares were up $6.33 on Tuesday afternoon, to $83.93.

Company:
OpenText
Website:
http://www.opentext.com
Location:
Waterloo, Ontario, Canada

OpenText, an enterprise software company and leader in enterprise content management, helps organizations manage and gain the true value of their business content. OpenText brings two decades of expertise supporting millions of users in 114 countries. Working with our customers and partners, we bring together leading Content Experts to help organizations capture and preserve corporate memory, increase brand... more


blog comments powered by Disqus

Jacob Serebrin

Jacob Serebrin

Jacob Serebrin is a freelance reporter based in Montreal. He specializes in covering small business and the business of tech. His work has appeared in publications including The Globe and Mail and The Toronto Star. Having previously covered higher education and politics, he started covering business almost by accident, but talking to passionate people about interesting things soon had him... more



Who's Hiring



Recent Comments

Powered by Disqus