OpenText enters into definitive agreement to take over Dell EMC’s Enterprise Content Division

OpenText Corp. announced Monday that it has entered into a definitive agreement to acquire Dell EMC’s Enterprise Content Division (ECD), including Documentum. ECD offers a suite of enterprise content management solutions with industry focus, including the Documentum, InfoArchive and LEAP product families. This will enable users to accelerate digital transformation with integrated enterprise information management, including offerings for enterprise content management and information lifecycle management.

When combined with existing OpenText products, these offerings will enable customers to manage content across the enterprise securely and compliantly, decommission legacy apps to make information more available for complete analysis and insight, and create new ways to work across any device. In keeping with flexible deployment options, they will be available as on-premises, cloud, or hybrid architectures.

Under the terms of the agreement, the software, associated services, and employees of ECD will be integrated into OpenText. With expertise in healthcare, life sciences, and public sector, plus additional capacity in financial services, energy, and engineering, OpenText will further strengthen its vertical offerings, customer base, managed services, and geographical coverage.

The purchase price of the transaction stands at $1.62 billion which is 2.7 times ECD FY15 revenue of $599 million. The deal is targeting to onboard to the OpenText operating model within the first 12 months and be immediately accretive to earnings. The transaction is expected close within 90 to 120 days, and is subject to regulatory approvals and customary closing conditions.

Barclays acted as a financial advisor to OpenText and provided a $1 billion debt commitment in support of the transaction. Although the exact components of the permanent financing for the acquisition are yet to be determined, OpenText’s objective is to maintain a conservative capital structure, including preserving its current credit ratings. As such, the permanent financing may include elements of cash on hand, new borrowings under credit facilities, and newly issued equity. The acquisition is not subject to a financing condition.

Morgan Stanley acted as exclusive financial advisor to Dell Technologies in connection with the transaction.

“ECD provides great value for customers, and we are pleased that this will be enhanced as part of OpenText,” said David Goulden, president, Dell EMC. “In determining the best long-term future for ECD, we wanted to create a business with a leading position in Enterprise Information Management. OpenText shares our vision for the transformation to digital business, our passion for the role of information in the digital world, and the breadth of capabilities to help our customers realize that vision. Importantly, OpenText also shares our commitment to deliver a world-class total customer experience. Today’s news is great for all stakeholders.”

“We are at the beginning of the Digital revolution where extreme connectivity, automation, and computing are converging,” said OpenText CEO and CTO Mark J. Barrenechea. “This acquisition further strengthens OpenText as a leader in Enterprise Information Management, enabling customers to capture their Digital future and transform into information-based businesses. We are very excited about the opportunities which ECD and Documentum bring, and I look forward to welcoming our new customers, employees, and partners to OpenText.”

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