Layoffs Ahead As OpenText Closes $5.8B Micro Focus Buy
OpenText says it expects to reduce the company’s workforce by 8 percent following its $5.8 billion acquisition Tuesday of Micro Focus.
OpenText completed its massive $5.8 billion acquisition Tuesday of fellow software and cybersecurity specialist Micro Focus, creating one of the world’s largest information management and security businesses.
However, OpenText said in a statement Tuesday that the company expects to “balance the combined company through an approximately 8 percent workforce reduction due to the acquisition of Micro Focus.”
These employee layoffs will amount to “cost synergies of $400 million,” said the Waterloo, Canada-based company.
According to OpenText, the merger will create a workforce of approximately 25,000 professionals. Micro Focus has around 11,000 employees worldwide, while OpenText has around 14,000 total employees on a global basis.
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CRN reached out to OpenText for comment on how many employees would be laid off following the acquisition.
When contacted, OpenText declined to say how many employees would be let go but confirmed “the combined company will balance and reduce the workforce by approximately 8 percent.”
“OpenText has a structured and disciplined approach to M&A,” OpenText said in an email to CRN. “The last six months of planning has led to a defined integration plan to deliver on committed outcomes that will position the company to win the Information Management market, including strong customer outcomes, company growth, and expanded cash flows. OpenText is in quiet period and will provide further comment on the Feb. 2 financial results call.”
OpenText is set to report its second fiscal quarter 2023 financial results on Feb. 2.
“I would like to welcome Micro Focus customers, partners and employees to OpenText,” said Mark J. Barrenechea, CEO and CTO of OpenText, in a statement Tuesday. “Digital life is life, and with Micro Focus’ great products and talent, we will help organizations of all sizes accelerate their digital transformation.”
OpenText’s Acquisition Of Micro Focus
In August, information management software vendor OpenText unveiled plans to buy Micro Focus for roughly $6 billion.
OpenText reported fiscal year 2022 revenue of $3.5 billion, including cloud revenue of $1.5 billion, customer support revenue of $1.3 billion, licensing revenue of $350 million and professional services revenue of $270 million.
Newbury, U.K.-based Micro Focus reported total annual revenue of $2.7 billion, with maintenance accounting for $1.7 billion, SaaS and other recurring revenue of $136 million, consulting revenue of $169 million and license revenue of $656 million.
North America is the largest market for both companies.
OpenText’s CEO said with the merger of Micro Focus, his company will expand to help enterprises secure their operations, gain more insight into their information, and better manage an increasingly hybrid and complex digital fabric with new tools that include cybersecurity, digital operations management, application modernization and delivery, and AI and analytics.
“This new generation of information management software will help organizations accelerate their digital transformation and drive growth while reducing costs,” said Barrenechea.
OpenText’s Acquisition Pace
Micro Focus is the latest in a string of software acquisitions OpenText has made in recent years.
In November 2021, the company unveiled a plan to acquire email encryption software developer Zix in an $860 million deal.
In 2019, OpenText acquired cloud data protection technology developer Carbonite for $1.42 billion. That deal included security vendor Webroot, which was acquired by Carbonite only a few months before Carbonite was acquired by OpenText.