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Open Text books another company buy

The Canadian software maker agrees to acquire Germany's IXOS Software in a deal expected to be worth at least $206 million.

Canadian software maker Open Text agreed on Tuesday to acquire Germany's IXOS Software in a deal expected to be worth at least $206 million.

Both companies specialize in software intended to help companies catalog, search and control access to electronic documents stored on servers, a niche known as content management. Storage maker EMC just entered the market last week with a $1.7 billion offer to acquire Open Text rival Documentum.

IXOS, which is based in Munich, Germany, has $145 million in annual revenue and 900 employees, according to the company. Under the deal, Open Text has agreed to pay $10.46 (9 euros) per share, or .261 of an Open Text share, for each IXOS share tendered. Shares of IXOS traded at $9.74 per share at the close of market on Monday. The managers and directors of each company support the merger, the companies said. They expect to complete the deal by February.

The purchase of IXOS should help Open Text expand its international presence and build its stature as big companies such as EMC enter the content management market, Open Text said. As part of the merger, Open Text plans to reorganize into two divisions, a North American unit with headquarters in Chicago and a European unit based in Munich.

Open Text has not yet determined whether it will cut any staff as a result of the merger, an Open Text representative said.

IXOS is Open Text's fourth acquisition and its largest this year. The others it acquired are Gauss Interprise, also based in Germany, and U.S.-based companies Corechange and Eloquent.

News analysis

Content management is
becoming a standard part
of business processes.

The content management software market is seen as a growing and increasingly competitive field. Analysts say interest in the technology is on the rise as businesses face pressure to retain documents in the aftermath of the Enron scandal and increased regulatory scrutiny. In addition to EMC, Open Text's rivals include Interwoven, FileNet and IBM. Software giants Microsoft and Oracle and storage player Hewlett-Packard are also eyeing the market, analysts say.