Strengthens SMB Platform with Cloud-based Email
Security & Compliance Solutions, Brings 5,600
Managed Service Partners, Extends Microsoft Relationship
WATERLOO, ON, Nov. 8, 2021 /CNW/
-- OpenText™ (NASDAQ: OTEX), (TSX: OTEX) today announced
that it has entered into a definitive agreement to acquire Zix
Corporation, Inc. (NASDAQ: ZIXI) ("Zix"), a leader in SaaS-based
email encryption, threat protection and compliance cloud solutions
for Small and Medium-sized Businesses (SMBs).
"We are pleased to announce our intent to acquire Zix, and I
look forward to welcoming Zix customers, partners and employees to
OpenText," said OpenText CEO & CTO Mark
J. Barrenechea. "We intend to integrate Carbonite, Webroot
and Zix products to create a powerhouse SMB platform for data
protection, threat management, email security and compliance
solutions. Acquisitions of cloud growth assets like Zix
highlights our commitment to our Total Growth strategy and approach
to cash-based returns."
"Zix will deepen our technology and go-to-market relationship
with Microsoft. Further, Zix will bring approximately 5,600
MSPs to OpenText, and create significant cross-sell opportunities
in the OpenText and Zix clouds. Today's announcement
demonstrates our commitment to winning in both the Enterprise and
SMB markets," said Mr. Barrenechea.
"The acquisition of Carbonite in December
2019 and its successful integration has given us the
confidence and readiness to expand even further into the SMB
market" added OpenText EVP & CFO, Madhu
Ranganathan. "Zix brings a meaningful addition to our cloud
revenues and will be immediately accretive to our adjusted EBITDA.
Once integrated, we expect Zix to contribute to organic growth in
cloud and Annual Recurring Revenues, be on the OpenText operating
model for profitability and meet our cash-based returns criteria.
We remain committed to maintaining a healthy balance sheet,
delivering strong earnings, and continuing to invest in our organic
growth initiatives."
OpenText CEO & CTO Mark J.
Barrenechea and OpenText EVP, CFO Madhu Ranganathan will host a conference call
today at 9:00 a.m. Eastern Time to
discuss today's announcement. Conference call details are included
further below.
About the Transaction and Terms of the Agreement:
- Tender offer to be commenced for all outstanding Zix common
stock (including shares of common stock issued upon conversion of
Zix's Series A Preferred Stock) shares for $8.50 per share in cash
- Total purchase price of approximately $860 million, inclusive of Zix's cash and
debt
- Total purchase price is approximately 3.5x TTM (Trailing Twelve
Months) Zix GAAP revenues (as of September
30, 2021)
- Expect meaningful expansion of cloud revenues, adjusted EBITDA
and cash flows in OpenText's Fiscal 2023
- Expect Zix Annual Recurring Revenues (ARR) of greater than
90%
- Immediately accretive upon closing to adjusted EBITDA, and
targeting to be on the OpenText operating model within 12-18 months
of closing
- Funded with OpenText's existing cash on hand
- Expect the transaction to close within 90 days of this
announcement
- Financial projections and target models will be provided on the
earnings call following the closing of the transaction
(1)
OpenText, through a wholly owned subsidiary, intends to commence
the tender offer for all of the common shares of Zix within 10
business days. Pursuant to the merger agreement, the tender offer
will be followed by a merger to acquire any untendered shares. The
tender offer is subject to the tender of at least one share more
than two-thirds of all of the issued and outstanding common shares
of Zix and certain other regulatory approvals and customary closing
conditions. The holders of approximately 31% of Zix's issued and
outstanding shares of common stock (including shares of common
stock issuable upon the conversion of Zix's Series A Preferred
Stock) have agreed to tender their shares to OpenText pursuant to
the tender offer in accordance with the terms of certain support
agreements.
(1) Upon closing, Zix's resell business will be reported
on a "net" basis to conform to OpenText's revenue recognition
policies. The net basis recognition will result in Zix's immediate
conformance to OpenText Gross Margin Model.
Additional Information
The tender offer described in this communication has not yet
commenced. This communication is provided for informational
purposes only and does not constitute an offer to purchase or the
solicitation of an offer to sell any securities. At the time the
tender offer is commenced, OpenText and a wholly owned subsidiary
intend to file with the Securities and Exchange Commission (the
"SEC") a Tender Offer Statement on Schedule TO containing an offer
to purchase, a form of letter of transmittal and other documents
relating to the tender offer, and Zix intends to file with the SEC
a Solicitation/Recommendation Statement on Schedule 14D-9 with
respect to the tender offer. OpenText, its wholly owned subsidiary
and Zix intend to mail these documents to the Zix shareholders.
Investors and shareholders are urged to read those documents and
other relevant documents filed or to be filed with the SEC
carefully when they become available as they will contain important
information about OpenText, Zix, the tender offer and related
matters. Those documents as well as OpenText's and Zix's other
public filings with the SEC may be obtained without charge at the
SEC's website at www.sec.gov. OpenText's public filings with the
SEC may be obtained at OpenText's website at
http://investors.opentext.com/ and Zix's public filings with the
SEC may be obtained at Zix's website at
http://investor.zixcorp.com/
Information contained on, or that is referenced or can be
accessed through, these website does not constitute part of this
press release and inclusions of any website addresses herein are
inactive textual references only. The offer to purchase and related
materials may also be obtained (when available) for free by
contacting the information agent to be named for the tender
offer.
Conference Call Information
The public is invited to listen to the OpenText conference call
today at 9:00 a.m. ET (6:00 a.m. PT) by dialing 1-800-319-4610
(toll-free) or +1-604-638-5340 (international). Please dial-in 10
minutes ahead of time to ensure proper connection. Alternatively,
an audio webcast of the conference call will be available on the
Investor Relations section of the Company's website
at http://investors.opentext.com/. A replay of the call will
be available beginning November 8,
2021, at 10:30 a.m. ET through
11:59 p.m. on November 22, 2021, and can be accessed by dialing
1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and
using passcode 8124 followed by the number sign.
About OpenText
OpenText, The Information Company™, enables organizations to
gain insight through market leading information management
solutions, powered by OpenText Cloud Editions. For more information
about OpenText (NASDAQ: OTEX, TSX: OTEX) visit opentext.com
Cautionary Statement Regarding Forward-Looking
Statements
Certain statements in this press release, including statements
regarding OpenText's plans, objectives, expectations and intentions
relating to the acquisition, the acquisition's expected
contribution to OpenText's results, financing and closing of the
acquisition, as well as the expected timing and benefits of the
acquisition, impact on future financial performance including in
respect of annual recurring revenues, cloud growth, adjusted
EBITDA, cash flows and earnings, may contain words considered
forward-looking statements or information under applicable
securities laws. These statements are based on OpenText's current
expectations, estimates, forecasts and projections about the
operating environment, economies and markets in which OpenText
operates, as well as the impact of the ongoing COVID-19 pandemic.
These statements are subject to important assumptions, risks and
uncertainties that are difficult to predict, and the actual outcome
may be materially different. OpenText's assumptions, although
considered reasonable by the company at the date of this press
release, may prove to be inaccurate and consequently its actual
results could differ materially from the expectations set out
herein. For additional information with respect to risks and other
factors, which could occur, see OpenText's Annual Report on Form
10-K, Quarterly Reports on Form 10-Q and other securities filings
with the SEC and other securities regulators. Unless otherwise
required by applicable securities laws, OpenText disclaims any
intention or obligations to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Copyright © 2021 OpenText. All Rights Reserved. Trademarks
owned by OpenText. One or more patents may cover this product(s).
For more information, please visit
https://www.opentext.com/patents.
Notes: (1) All dollar amounts in this press release are in US
dollars unless otherwise indicated.
Further information, please contact:
Harry E.
Blount
Senior Vice President, Investor
Relations
Open Text Corporation
415-963-0825
investors@opentext.com
Chris
Plunkett
Vice President, Corporate
Communications
Open Text Corporation
519-497-0742
publicrelations@opentext.com
OTEX-MNA
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SOURCE Open Text Corporation