OpenText buys GXS for USD 1.165 billion! These are the financial and business details

After buying Cordys last August, OpenText now unveiled the acquisition of GXS for a mere USD 1.165 billion. OpenText wanted to buy GXS as it envisions that we are going to enter an era of Enterprise Information Management. The GXS acquisition strengthens the Information Exchange Pillar of OpenText with the addition of market leading cloud-based B2B integration services.

After closing the deal, OpenText and GXS together expect to serve more than 55.000 trading partners and 80.000 customers and support approximately 16 billion annual transactions in the cloud. For those interested we have some neat details on this deal.

Financial

• The purchase price is $1.165 Billion with a financing commitment of a $800 million loan, $265 million in cash and equity of $100 million.
• $60 million is subject to escrow related to certain representations, warranties and covenants
• The purchase price represents 2.1 to 2.4% of OpenText’s outstanding common shares
• The purchase price represents  2.4 times GXS Fiscal Year 2012 revenues.
• Upon completion of the transaction, GXS stockholders will own approximately 2.1 to 2.4% of OpenText’s outstanding common shares
• GXS will become a wholly-owned subsidiary of OpenText.

Busines wise

• OpenText targets to onboard GXS to the OpenText operating model within 2 years.
• OpenText targets the transaction to close within 90 days subject to customary closing conditions
• Upon closing of the transaction, OpenText and GXS together expect to serve more than 55,000 trading partners, 80,000 customers and support approximately 16 billion annual transactions in the cloud.
• The acquisition reinforces OpenText’s leadership in EIM by combining OpenText’s Information Exchange portfolio of Managed File Transfer, Secure E-mail, FAX, Capture and EDI with GXS’s portfolio of B2B integration services and managed services, which helps customers to extend their partner networks to automate multi-enterprise processes and manage value-added commerce transactions.

Quotes

• OpenText CEO Mark J. Barrenechea:  “The next generation of enterprise software is Enterprise Information Management. Today’s GXS announcement strengthens the Information Exchange pillar with the addition of market leading cloud-based B2B integration services, it expands the EIM buying centers and it strengthens EIM with the addition of cloud-based Managed Services. I look forward to welcoming GXS employees, customers and partners to OpenText in the near future.” 
• Bob Segert, President and Chief Executive Officer of GXS: “In today’s global and highly distributed business, the on-going complexities and costs of do-it-yourself B2B integration pose significant challenges to organizations that need to integrate and orchestrate multi-enterprise processes across time, geographies and a multitude of trading partners. 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.”