Just prior to the Christmas holiday, Enterprise Information Management (EIM) and Supply Chain B2B Business Network platform provider OpenText announced the closing of the previously announced acquisition of Carbonite, Inc., in a stock tender transaction valued at approximately $1.45 billion. This acquisition is touted as providing added benefits for both existing EIM and B2B Supply Chain Network focused customers. 
Background
Boston based Carbonite is described as providing a Cloud-based data protection platform for businesses that includes backup disaster recovery, high availability and workload migration technology. The company offers its technology under three separate brands, Carbonite data protection, Webroot cybersecurity, and MailStore email archiving, mostly to small and medium-sized businesses.
On November 25th, OpenText announced to investors of both companies that the enterprise technology provider had commenced tender offer for all of the outstanding shares of common stock of Carbonite, at a price of $23.00 per share. This offer was made in context with an Agreement and Plan of Merger which was previously reported on November 11th.
The data protection provider had reportedly become the subject of multiple takeover rumors after revenues dropped precipitously. The company’s CEO had stepped down in July and was replaced on an interim basis by the company’s board chairperson.
At the time of commencement of the tender, the Carbonite board had unanimously voted that the offer was in the best interests of the company and its stockholders, advising that shares be tendered. The board chair indicated in a press release: “Following expressions of interest from multiple parties, the Carbonite board conducted a thorough and comprehensive process, which included contact with a number of strategic and financial parties, to identify the best way to maximize shareholder value. The board strongly believes that a transaction with OpenText delivers compelling, immediate, and substantial cash value to shareholders.”
According to a published report from VentureBeat: “OpenText was willing a pay a 78% premium on Carbonite’s September 5 closing price, before the media first reported that a sale could be in the cards.”
The announcement of the completed closing was made the day after the stock tender offer was scheduled to expire, an indication that over 50 percent of Carbonite stockholders tendered shares.
Potential Synergies
In the press release announcing completion of the acquisition, OpenText CEO and CTO Mark J. Barrenenechea states: “I am delighted to announce today the completion of the Carbonite acquisition and warmly welcome Carbonite customers, partners, and employees to OpenText. Combined, we will be able to provide our customers the first end-point platform that offers data protection, endpoint security, intrusion detection and digital forensics – ensuring cyber resiliency and trusted innovation.” Barrenechea further added, “We have confidence in our ability to integrate, innovate and grow the business. As previously highlighted, we are targeting for Carbonite to be on our operating model by the end of Fiscal 2021, or sooner. We expect strong cloud growth and cash flow expansion from the acquisition.”
At first blush, and lacking integration specifics, the acquisition motivation appears to be added Cloud business growth and cash flow expansion, more of a financial expansion strategy.
Upon examining added presentation data, Supply Chain Matters made special note of what was defined as five key vector market areas or synergies that included the OpenText B2B Business Network as a target area along with Internet of Things (IoT). In the area of customer value approach, included was the added value in digital supply chains. These will be areas we will hone-in for added specifics when OpenText provides added information for investors and industry analysts.
An added thought relates to OpenText’s prior record in major acquisitions
The EIM and B2B Business Network platform provider has demonstrated a prior track record for managing to secure attractive and complimentary technology at a relatively cost attractive manner. However, the Carbonite deal appears far more expensive, the management challenges more obvious and the customer base somewhat more diverse. That could imply one of the largest integration challenges undertaken to-date.
Stay tuned for future updates and commentary.
Bob Ferrari
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Disclosure: OpenText Corporation is a prior sponsor of the Supply Chain Matters blog.
