In its sights this time is Gauss Interprise AG, a German web content management software provider. Waterloo, Ontario-based Open Text will snap up Gauss’ common shares for an $11m (10m euros) cash consideration. The agreement was reached with certain shareholders who hold 73% of Gauss’ stock.
Gauss, headquartered in Hamburg, develops web content management for corporate websites and intranets and integrated document and output Management (IDOM) software for ERP systems. Around half of Gauss’ revenues are derived from its Web content management business; its IDOM business is primarily focused in the US, handled through its Irvine, California offices.
The company has about 1,000 customers worldwide – including BMW, USA Today and Korean Air – and last year around 40% of its revenues came from the financial services sector.
Officials from both camps expect the combined entity to deliver a more rounded enterprise content management (ECM) suite. Despite the obvious overlaps in each other’s technology suites, both companies insist they have competed indirectly in the past.
We’ve competed in similar, but separate markets and regard each other’s installed bases and technologies as complementary, Tom Jenkins, CEO of Open Text, told analysts and media in conference call yesterday. But it was only a matter of time before we competed more directly.
Open Text’s real prize is Gauss’ web content management product, VIP ContentManager, which will extend Open Text’s Livelink for Content Management suite and tap into collaborative tools for developing, reviewing and publishing content to intranets and extranets.
Meanwhile Gauss’ IDOM product line will enable Open Text’s IDOM offerings to support high-throughput document processing. It will also complement Livelink’s workflows, which are designed to apply business processes to the unstructured content companies maintain in Livelink to improve collaboration.
Gauss’ technology will also add JD Edwards support to Open Text’s set of ERP connectors; as well as a range of ERP applications on IBM AS/400 systems to existing connectors for PeopleSoft.
Content management vendors continue to push back the technical boundaries of ECM, which has led to increased consolidation in the industry.
Open Text will gain increased critical mass that constitute ECM, said Jenkins. Over the long term, we’ll be well positioned to deliver one of the most comprehensive ECM suite available in the market today…and at a time when customers are seeking out complete, integrated suites from fewer vendors.
Ron Vangell, Chief Executive Officer of Gauss, concurred, saying: It’s clearly the right move for both companies to position us for future growth in a sector of the software market that is changing rapidly.
Jenkins also pointed to vertical synergies. They [Gauss] have definite strengths around financial services industry, around which they’ve built templates for their product…it also happens that financial services is one of our three core verticals, he said.
Jenkins claims that a lot of integration work has already been done, and is confident of formally showcasing the fruits of this effort at the next Livelink user conference this November. He also said that Open would continue to maintain Gauss’ existing product line and support its customers. We’ll keep all the technology product lines going forward.
Jenkins believes that Open Text’s experience in quickly and effectively absorbing acquisitions – three this year – together with its global presence positions the company strongly to take advantage of the consolidation trend in the enterprise software market.
Vendors with a global presence can drive efficiencies with similar minded, and smaller companies, Jenkins said.
The transaction is expected to close in the Open Text’s fiscal 2004 second quarter (ending December, 2003). To reflect the partial year inclusion of Gauss’ revenue, Open Text will increase its guidance for fiscal 2004 from $215m to $225m. Open Text’s war chest will remain pretty healthy even after the transaction is complete – with around $100m of cash still in hand.
Open Text officials refused to comment on restructuring charges or further headcount reductions as a result of merging the two companies’ operations. Jenkins however did day that Gauss had already taken steps prior to the acquisition to put the company into a more profitable mode.
Source: Computerwire
