OpenText to buy Dell EMC division for US$1.62B

Business software company OpenText Corp. (TSX:OTC) says it has signed a deal to buy Dell EMC’s enterprise content division for US$1.62 billion.

Under terms of the agreement, the software, associated services, and employees in the division would be integrated into OpenText.

OpenText, which is headquartered in Waterloo and has a sizeable Ottawa presence, says the deal boosts its enterprise information management business.

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“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,” OpenText CEO Mark Barrenechea said in a statement Monday.

“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.”

Shares of OpenText pushed higher on the news as they gained C$6.57 to trade for C$84.54 on the Toronto Stock Exchange.

The company has been growing its cloud services business as more companies move their information online.

The acquisition includes Dell EMC’s Documentum, InfoArchive, and Leap products.

“In determining the best long-term future for ECD, we wanted to create a business with a leading position in enterprise information management,” Dell EMC president David Goulden said.

“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.”

The deal follows the completion of Dell’s merger with EMC to create Dell Technologies.

The price paid by OpenText is 2.7 times the division’s revenue of US$599 million in its 2015 financial year.

The deal is expected to close within 90 to 120 days and is subject to regulatory approval and customary closing conditions.

The companies also say they plan to negotiate a strategic commercial partnership to expand customer offerings.

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