Why OpenText Is Buying Carbonite For $1.42 Billion

By Amit Chowdhry ● Nov 12, 2019
  • Waterloo, Ontario-based enterprise information company OpenText announced it is buying Carbonite for $1.42 billion. These are the details about the deal.

Waterloo, Ontario-based enterprise information company OpenText announced recently that it is buying Boston-based data protection and cybersecurity company Carbonite for $1.42 billion. Carbonite is known for selling endpoint and cloud security software. Carbonite has 7 million individual and 300,000 SMBs customers.

“We’re declaring SMB and prosumer a strategic market for enterprise information management,” said OpenText CEO Mark Barrenechea in an interview with Financial Post. And Barrenechea is expecting that the integration of Carbonite into OpenText will take about 18 months.

Carbonite is profitable. Plus Barrenechea said Carbonite is also “operating at a higher margin.”

OpenText has been making some aggressive acquisitions lately. For example, the company also bought Dell EMC for $1.62 billion a few years ago.

As part of the deal, OpenText is buying each Carbonite share for $23 in cash. And this represents a 78% premium to Carbonite’s unaffected closing stock price on September 5, 2019 — which is the last trading day before a media report was published that was speculating a potential sale process.

“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,” added Steve Munford, Interim Chief Executive Officer and President/Executive Chairman of the Board of Carbonite. “The Board strongly believes that a transaction with OpenText delivers compelling, immediate and substantial cash value to shareholders.

This transaction is subject to customary closing conditions, including the tender of a majority of the outstanding shares of Carbonite common stock and regulatory approvals.

J.P. Morgan Securities LLC acted as  the financial advisor to Carbonite and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor.