OpenText™ announced that it has reached a definitive agreement to divest its AMC business to Rocket Software, Inc., a Bain Capital portfolio company ("Rocket Software"), for US$2.275 billion in cash. OpenText's AMC business provides market leading mainframe modernization and connectivity software to more than 10,000 customers enabling them to run mission-critical business applications in hybrid cloud environments. Benefits of the transaction include:
- Reinforces and expands OpenText's focus on Cloud and AI
- Results in more predictable growth
- Increases focus on cloud growth opportunities
- Accelerates de-leverage plan, expect to be under 3x Consolidated Net Leverage Ratio(1) within 90 days of closing
- Returns OpenText to capital flexibility, including potential future share buybacks
"The growth prospects for Information Management have never been better. We are divesting our mainframe business so we can singularly focus on the powerful Cloud and AI opportunities within Information Management. This divestiture will better position us to move with more speed in higher organic growth areas such as Cloud capabilities and AI, strengthens our balance sheet to achieve our deleveraging targets ahead of schedule and returns the company to capital flexibility. This divestiture supports our focus on creating value for our shareholders."
-Mark J. Barrenechea, OpenText CEO & CTO
About the Transaction:
- $2.275B all-cash purchase price before taxes and fees
- Sale price of 4.6x AMC's F'23 revenue of approximately $500M(2)
- Sale price of 8.3x AMC's F'23 Adjusted EBITDA of approximately $275M(2)
- Net proceeds to reduce debt, to be applied to the Acquisition Term Loan and Term Loan B
- Expect to close in OpenText's fourth fiscal quarter ending June 30, 2024, subject to regulatory approvals and customary closing conditions
The combination of AMC and Rocket Software's highly complementary product portfolios will create one of the world's largest IT and mainframe modernization and connectivity software companies. Under the terms of the agreement, the software, associated services, and approximately 750 employees of AMC will be integrated into Rocket Software.
Until closing, OpenText and Rocket Software will continue to constructively collaborate to protect customer investments and expand offerings for joint customers.
Goldman Sachs & Co. LLC is serving as sole financial advisor to OpenText and Cleary Gottlieb Steen & Hamilton LLP is acting as legal advisor to OpenText.
To view the original press release, please click here.
