board of directors Tuesday blessed a $250 million acquisition bid from larger enterprise content management (ECM) player Open Text
as the ECM space continues to consolidate.
The deal could make Open Text, which also bought a 75 percent interest in Germany’s Gauss Interprise, the largest power in the ECM space. Open Text’s strength lies in collaboration and knowledge management, while IXOS’s forte is archiving and content management, especially in the European market. Analysts say the companies complement each other well.
Meanwhile, giant Documentum
is in the process of being acquired by storage systems maker EMC
, but FileNet
remain the other heavyweights in what is becoming an increasingly lucrative business for helping companies manage content such as e-mails, Web audio and video clips, and other files.
Storage companies like EMC and Hitachi Data Systems (HDS)
have made their interest in ECM solutions obvious, rendering the companies that craft them ripe for acquisition or licensing agreements. IXOS recently inked deals with HDS and StorageTek
. Storage vendors are using ECM products to retrieve and manage the files their products store in a practice known as information lifecycle management (ILM).
While many believe the Open Text/IXOS deal will pass regulatory and shareholder muster, no deal is guaranteed as evidenced by the current Oracle/PeopleSoft brouhaha.
The acceptance period for Open Text’s purchase of IXOS Software through its subsidiary, 2016091 Ontario Inc., remains open until Jan. 16, while regulators and shareholders consider the offer.
Ontario’s Open Text is offering a cash consideration of approximately $10.46 per share, but IXOS shareholders may opt for share and warrant consideration instead. So, if an IXOS shareholder chooses, the buyout could be 0.5220 of an Open Text common share and 0.1484 of a warrant for each IXOS share, with each whole warrant exercisable to purchase one Open Text common share for up to one year after the closing of the offer at $20.75 per share.
The cash offer represents a 34 percent premium based on the three months volume weighted average trading price of the IXOS shares prior to the announcement.
In other developments, Royal Bank of Canada has made a commitment to 2016091 Ontario Inc. to grant loans for up to $147 million to help finance the IXOS deal. Open Text intends to draw on this loan facility to supplement its own funds in satisfying the cash payable under the tender offer.
Open Text posted revenues of $178 million in fiscal 2003 and employs 1,200. IXOS generated $145 million during the same period and boasts around 900 employees. If the deal is consummated, IXOS’s headquarters in Munich will become Open Text’s European base and will be run by IXOS CEO Robert Hoog.
Story courtesy of Internet News.
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