Canadian business software firm Open Text to acquire GXS Group for $1.17 bn

Canadian enterprise software maker Open Text Corp yesterday said that it would acquire privately-held cloud services company GXS Group Inc, for $1.17 billion.

"The next generation of enterprise software is Enterprise Information Management," said OpenText CEO, Mark Barrenechea. "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."

This is biggest acquisition being made by Open Text after it purchased easyLink in 2012 for $310-million and metastorm and Global360 for a combined $440-million in 2011.

Open Text, Canada's largest software company, said in a statement that it would pay about $1.07-billion of the deal amount in cash and $100-million in its common shares.

Post closing, GXS stockholders will own about 2.1-2.4 per cent of Open Text's outstanding common shares.

Open Text has obtained a committed bank financing of up to $800-million from Barclays and RBC Capital Markets, and will finance the cash portion of the deal with the loan and cash on hand.

Maryland-based GXS is one of the largest providers of cloud -based commercial interaction platforms connecting more than 550,000 companies, including 22 of the top 25 supply chains, exchange electronic transactions with their partners.

Each year, it manages more than 12 billion transactions for retailers, manufacturers and banks and its customer base includes 50 per cent of the Forbes Global 1000. 

GXS's cloud-based B2B integration services enable trading partners to integrate and manage business processes and transactions across complex global networks of customers, partners and suppliers.

Its cloud platform, the GXS Trading Grid, eliminates the ongoing complexities and costs of do-it-yourself B2B integration. GXS Managed Services enables customers to offload complex B2B e-commerce requirements to GXS.

GXS allows businesses to streamline new product launches, digitize accounts payable, automate warehouse receiving, conduct e-invoicing and e-payments and increase global supply chain visibility.

It has approximately 2,900 employees, and reported 2012 revenues of $487 million.

Post closing, OpenText and GXS together expect to serve more than 80,000 customers and support approximately 16 billion annual transactions in the cloud. 

Ontario-based OpenText provides enterprise information management software that helps companies of all sizes   to manage, secure and leverage their unstructured business information, either in their data centre or in the cloud. Over 50,000 companies already use OpenText solutions.

"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," said Bob Segert, president and CEO of GXS.