21 October2003 Canadian enterprise content management (ECM) software company Open Text is to buy rival Ixos, a key SAP partner, in a deal that values the German company at around €200 million.
The deal, which awaits regulatory and shareholder approval, is the latest in a string of mergers in the ECM sector.
“As the market continues to consolidate, we’re focused on developing the most complete solutions to meet the needs of our customers, and expanding our worldwide presence as a leader in ECM,” said Tom Jenkins, CEO of Open Text. “By combining Open Text and Ixos, we can offer customers an ideal combination of technologies, solution flexibility and platform choice, all delivered from a single, financially stable company they can partner with for the long term.”
Analysts say that Ixos specialises in document output management and archiving software for users of enterprise applications from SAP. It sought to widen its focus in January 2003 with the acquisitions of workflow supplier PowerWork and web content management supplier Obtree.
Despite these purchases, say analysts, Ixos still lacks key document management capabilities including flexible versioning, process customisation, authoring, collaboration, and compound document support.
Open Text, by contrast, already offers these functions, has strong workflow capabilities and recently filled a gap in its portfolio – web content management – with the acquisition of another German supplier, Gauss Interprise.
The latest deal will enable Open Text to target multinational companies that use SAP software. About four-fifths of Ixos’s customer base falls into that category – representing around half of SAP’s global installed base.
Furthermore, the deal extends Open Text’s European reach. At present, more than half (58%) of Open Text’s $178 million revenues come from sales to North American customers. By contrast, 61% of Ixos’ $145 million annual sales come from Europe, the Middle East and Africa.
The new Open Text will be organised into two divisions.
The North American-based division, with operational headquarters in Chicago, will have global responsibility for collaboration and knowledge management solutions as well as North American responsibility for operations.
The European-based division, headquartered in Munich, will have global responsibility for content management and archiving as well as European responsibility for operations. Gauss Interprises will also be part of the European content management division. Robert Hoog, the Ixos CEO, will become head of the European unit.
Open Text executives claim that the deal will create “the world’s largest ECM software company”. However, with combined sales of $323 million, the new company is still smaller than the market leader, FileNet, which posted sales of $347 million for its most recent fiscal year.