OpenText is buying Dell EMC's enterprise content division in a $1.62 billion deal that expands the company's capabilities in enterprise information management while giving Dell Technologies more cash to help it pay down debt following the close last week of its $60 billion-plus acquisition of EMC.
The deal for the enterprise content division (ECD), which OpenText officials announced Sept. 12, is the latest in a string of acquisitions the company has made in recent months as it looks to bolster its enterprise information management (EIM) portfolio, particularly in enterprise content management (ECM) and information lifecycle management.
It also comes five months after reports surfaced that Dell was looking to sell EMC's content management division—which includes the Documentum, InfoArchive and LEAP product families—to shed businesses outside of its core efforts and to lower the overall debt it will incur from the EMC deal. The deal with OpenText is expected to close in three to four months.
"When combined with existing OpenText products, these offerings will enable customers to manage content across the enterprise securely and compliantly, decommission legacy apps to make information more available for complete analysis and insight, and create new ways to work across any device," President and CEO Mark Barrenechea wrote in a post on the company blog. "In keeping with our flexible deployment options, they will be available as on-premises, cloud or hybrid architectures."
OpenText is a $1.9 billion company with 8,600 employees and more than 100,000 customers. In April, the company spent about $170 million to buy certain customer experience software and services assets from HP Inc., including a digital experience management platform for web content management, a digital asset management offering and an intelligent workforce optimization product. Two months later, OpenText bought customer communications management technologies from HP, including Exstream, Output Management, TeleForm and LiquidOffice for everything from process automation to document delivery offerings.
The deal for Dell EMC's ECD will enable OpenText to help its customers accelerate their adoption of a full digital business environment, Barrenechea said in a statement. The vendor, whose software helps businesses manage huge volumes of data, will grow its range of industry offerings for particular verticals, expand its customer base and extend its reach into new regions.
OpenText will integrate the software, services and employees of Dell EMC's ECD unit into the company, and the two companies announced plans to negotiate a strategic business partnership to expand offerings to their customers.
"In determining the best long-term future for ECD, we wanted to create a business with a leading position in enterprise information management," Dell EMC President David Goulden said in a statement. "OpenText shares our vision for the transformation to digital business, our passion for the role of information in the digital world, and the breadth of capabilities to help our customers realize that vision."
The deal allows Dell to divest itself of a profitable but non-essential business. The company is expected to take on as much as $50 billion in debt for the EMC acquisition, which also includes such EMC-federated businesses as VMware, Virtustream, RSA and Pivotal. Dell already has sold its services and much of its software assets over the past few months and now is able to take Documentum and other ECD product lines off the books.
The unit has performed well, with almost $600 million in revenue last year, but doesn't fit into plans laid out by CEO Michael Dell and other executives. EMC bought Documentum in 2003 for about $1.7 billion.