OpenText (TSE: OTEX) announced Thursday that it has completed its previously announced acquisition of Zix Corporation (NASDAQ: ZIXI), a leader in SaaS-based email encryption, threat protection and cloud compliance solutions for SMEs.
Zix Now a Wholly Owned Subsidiary of OpenText
The tender offer for all of the outstanding common shares of Zix (including the common shares issued upon conversion of the Series A preferred shares of Zix) for C$8.50 per share in cash has been completed.
The total purchase price is approximately C$860 million, including Zix cash and debt.
OpenText does not expect any significant operating income or expense from Zix during the holiday season between December 23 and December 31, in the current quarter (Q2 2022).
The company will give further financial projections, along with updated target models, when it releases its financial and business results for the second quarter of fiscal 2022.
OpenText CEO and CTO Mark J. Barrenechea said, “I would like to welcome Zix customers, partners, and employees to OpenText. Combined, we will be able to provide our customers a powerhouse SMB platform for data protection, threat management, email security and compliance solutions. Zix meaningfully expands our distribution capabilities with MSP partners, enhances our SMB offering and deepens our go-to-market relationship with Microsoft.
“OpenText is committed to winning Information Management in both the Enterprise and SMB markets. We are targeting for Zix to be on our operating model within 12-18 months and as previously highlighted, once integrated, we expect Zix to be accretive to organic growth and margin dollars.”
Wall Street’s Take
On November 8, Barclays analyst Raimo Lenschow reiterated a Hold rating on OTEX and raised its price target to $58 (C$74.53). This implies 23.1% upside potential.
Overall, consensus on the Street is that OTEX is a Moderate Buy, based on one Buy and one Hold. The average Open Text price target of C$74.53 implies upside potential of 23.1% to current levels.
TipRanks’ Smart Score
OTEX scores a 3 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock returns are likely to underperform the overall market.