OpenText announced that it has entered into a definitive agreement to acquire Carbonite, Inc., provider of cloud-based subscription data protection, backup, disaster recovery and end-point security to small and medium-sized businesses and consumers.
Mark J. Barrenechea of OpenText said Cloud platforms and secured, smart end-points are essential Information Management technologies as businesses transform into Industry 4.0, 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.
They will entered Fiscal 2020 with a solid balance sheet and they are off to a strong start with the announced acquisition of Carbonite as part of our Total Growth strategy accoring to Madhu Ranganathan. They are excited by the opportunity to bring forth exceptional leadership in operational execution and integration capabilities to Carbonite. Once integrated, they expect to increase their annual recurring revenues, deliver strong cloud growth, and expand cloud margins and adjusted EBITDA. The resulting growth in cash flows will enable them to maintain a healthy balance sheet, deliver strong earnings, and continue to deliver consistent growth in dividends to their shareholders.
The acquisition of Carbonite is expected to extend OpenText’s leadership in the Enterprise Information Management (EIM) market by complementing OpenText’s security offerings in data loss prevention, digital forensics, end-point detection and response with the addition of Carbonite’s data protection and end-point security solutions. The acquisition also adds significantly to OpenText’s Cloud business and further complements OpenText’s routes to market, strong enterprise customer base in the Global10K, enhanced SMB and prosumer markets.
Here are some facts about the Agreement:
Tender offer to be commenced for all outstanding Carbonite shares for $23.00 per share in cash(1)
Total purchase price of approximately $1.42 billion, inclusive of Carbonite’s cash and debt
Total purchase price is approximately 2.8x TTM (Trailing Twelve Months) Carbonite GAAP revenues (as of September 30, 2019), inclusive of annualized full year reported Webroot GAAP revenues, a significant acquisition which closed in March 2019
Expect significant expansion of cloud revenues, cloud margins, adjusted EBITDA and cash flows in Fiscal 2021
Current Carbonite Annual Recurring Revenues (ARR) of 90%
Accretive, and targeting to be on the OpenText operating model by end of Fiscal 2021
Funded with OpenText’s existing cash on hand and revolver
Estimated OpenText net leverage ratio at closing of approximately 2.5x, with a target to return to less than 2x net leverage during the 4-6 quarters post close of transaction
Financial projections and target models will be provided upon closing of transaction
