M&A

OpenText to Buy Carbonite for $1.42B

The deal would be OpenText’s ninth acquisition in the cloud space.
Lauren MuskettNovember 11, 2019

Enterprise information company OpenText has agreed to buy Carbonite for $1.42 billion, or $23 per share, inclusive of Carbonite’s cash and debt, the companies said.

The agreed price represents a 78% premium to Carbonite’s closing price on September 5, before media reports speculated on a possible deal.

“This acquisition will further strengthen OpenText as a leader in cloud platforms, complete end-point security and protection, and will open a new route to connect with customers, through Carbonite’s marquee SMB/prosumer channel and products,” OpenText chief executive officer Mark Barrenechea said in a statement.

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Carbonite reported a net loss of $14 million, or 40 cents a share, on revenue of $125.6 million in the third quarter. The total price represents about 2.8 times Carbonite’s trailing twelve months GAAP revenues as of September 30, 2019. The deal will be funded with OpenText’s existing cash on hand and revolver. The company said it had about $1 billion in cash on hand at the end of the first quarter.

OpenText has been growing through acquisitions. In recent years, the company has bought EasyLink, GXS, ANX, Covisint, Recommind, Hightail, Catalyst, and Liaison.

In February, Carbonite announced it was buying Webroot for $618.5 million in cash.

“We entered Fiscal 2020 with a solid balance sheet and we are off to a strong start with the announced acquisition of Carbonite as part of our total growth strategy,” OpenText chief financial officer Madhu Ranganathan said in a statement. “Once integrated, we expect to increase our annual recurring revenues, deliver strong cloud growth, and expand cloud margins and adjusted EBITDA.”

The companies said they expect the transaction to close within 90 days.

Carbonite shares were up nearly 25% in midday trading Monday on the news. Shares of OpenText were up more than 2%.