NEW YORK (The Deal) -- Canada's OpenText (OTEX) said Tuesday, Nov. 5, it would acquire privately-held GXS Group in a $1.17 billion deal that would expand the business software vendor's cloud operations.
GXS, of Gaithersburg, Md., operates a business-to-business exchange that allows its 550,000 trading partners to manage supply chains, make payments and launch new products. The company has about 2,900 workers and generated fiscal 2012 sales of $487 million.
OpenText said that as part of the deal it has obtained committed bank financing of up to $800 million from Barclays and RBC Capital Markets. Post-deal GXS' holders would own between 2.1% and 2.4% of OpenText's shares.
Waterloo, Ontario-based OpenText said that it would pay for the deal using $265 million in cash on hand, $800 million in debt and about $100 million worth of its shares. The buyer, which makes workflow and document management software, said that the addition of GXS's platform would give it a full-service cloud operation that would serve a combined 80,000 customers and support about 16 billion annual transactions.OpenText CEO Mark J. Barrenechea called this so-called enterprise information management "the next generation of enterprise software," and said "I look forward to welcoming GXS employees, customers and partners to OpenText in the near future." GXS, then known as Global eXchange Services, was spun out of General Electric (GE) in 2002 in a deal involving Francisco Partners and Norwest Venture Partners. The company in the years since acquired six other entities to build its product offering, including the information exchange business of IBM (IBM) and more recently RollStream. Company CEO Bob Segert in a statement said "integrating the GXS portfolio into OpenText will allow CIOs to focus their efforts on driving revenue growth while enabling innovation to stay ahead of the competition." Citigroup Global Markets acted as financial adviser to OpenText, with J.P. Morgan (JPM) advising GXS. Written by Lou Whiteman
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