OpenText acquires GXS, EDI and supply chain integration providers

Yesterday, Canadian Enterprise Information Management software company OpenText, valued at around $4.8 billion, bought GXS, “B2B EDI & supply chain integration, collaboration and synchronisation” provider for $1.165 billion, mostly in cash.

GXS had $490M in revenues last year, and the 2.4X revenue multiple is fairly decent for a firm that has been predominantly focused on low-level B2B data integration. That’s clearly not as fancy a valuation as Ariba, OB10 and others but probably fair for a firm that has most of its revenue in the less fashionable “EDI” type end of the supplier connectivity  and network world.

I may as well confess, I had barely heard of OpenText till yesterday – but their background is fascinating. Thanks, Wikipedia.

“OpenText Corporation was incorporated in 1991, a spin-off based on a project at the University of Waterloo (in Canada) to create an electronic Oxford English Dictionary — an undertaking that required developing search technologies that could be used to quickly index and retrieve information. The technology developed for this project was recognized as being useful for other business applications”.

So maybe it should have been a British company really! But now, OpenText has a whole range of software assets that broadly sit in the “enterprise information” space, although to a casual and ill-informed observer like me they look somewhat random to be honest. (Content management, business process management, customer experience management, information exchange...)  But it is interesting that a player we perceived as operating in “our” procurement and supply chain space has been swallowed up by a firm from really another world in term of business focus.

What might it mean for the more interesting capabilities GXS has, such as the Rollstream product with its social media feel, which I was rather taken with when I reviewed it here, we don’t know yet. Will they get lost in the larger and broader OpenText portfolio? Or might the extra muscle provide a boost to the GXS capabilities? We’ll see.

Finally, the best recommendation I can give if you’re interested in this is to read Pierre Mitchell and Jason Busch, my brilliant colleagues at Spend Matters US, and their take on it from last night.  Here is the final paragraph – as they say, stay tuned for more insight!

There’s so much more to cover around this transaction and what it means for the procurement, finance, and IT areas. We have been talking to various stakeholders in some firms (sorry to be cryptic), and in our next installment, we’ll discuss some of these elements, and their realistic ability to support procurement groups with their diverse needs in building a Procurement Information Architecture. 

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