Goodbye COBOL. OpenText to focus on cloud and AI opportunity
Rocket Software: “Combined Entity Will Offer the Most Compelling Portfolio of Solutions to Support the World’s Largest Companies in their Modernization and Hybrid Cloud Journeys”
Rocket Software, Inc. has signed a definitive agreement to acquire the Application Modernization and Connectivity business (AMC) of OpenText (NASDAQ: OTEX), (TSX: OTEX), which was formerly part of Micro Focus. The total purchase price is $2.275B.
You may remember OpenText bought Micro Focus for $6 billion USD just last year, almost doubling the size of the company. Barely a year after buying it they have now sold a big chunk of it (a $2.275B chunk no less) to Rocket Software in order to focus on the cloud and AI opportunity within information management.
OpenText’s Application Modernization and Connectivity (AMC) business provides mainframe modernization and connectivity software to more than 10,000 customers enabling them to run mission-critical business applications in hybrid cloud environments.
AMC has been a leader in application modernization for many years, providing industry-leading tools including COBOL and host connectivity. These tools enable organizations to leverage their core applications and offer flexibility for modernization, allowing them to run applications wherever they choose. With AMC, Rocket Software will have a more diverse modernization portfolio that aligns with customer demands, whether on-premises or through a hybrid cloud strategy.
The benefits of the transaction for OpenText is primarily centred around the growth opportunities in Cloud and AI, while accelerating OpenText’s plan to reduce debt (expected to be under 3x Consolidated Net Leverage Ratio within 90 days of closing).
Under the terms of the agreement, the software, associated services, and approximately 750 employees of AMC will be integrated into Rocket Software.
The transaction is expected to close in OpenText’s fourth fiscal quarter ending June 30, 2024, subject to regulatory approvals and customary closing conditions.
While Rocket Software are not known for their audit practices, as with any software vendor M&A activity, it’s always wise to make sure you’re in as good a position as possible. If you use these former Micro Focus products, it won’t hurt to do an internal audit and make sure you have all your contracts, POs etc. to hand.