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OpenText Acquires EasyLink

by Chris Norwood
Chris Norwood
Chris Norwood has been in the fax technology industry for almost 20 years facili
User is currently offline
on May 10 in FoIP
Pete Davidson of Davidson Consulting, well known fax technology industry analyst has shared with the AllAboutFoIP team and its website audience information about the OpenText acquisition of EasyLink..... There is plenty of buzz and blogs about what this will mean to the RightFax reseller channel, the fax server industry product landscape and current clients of RightFax and EasyLink.

OpenText, the leading provider of fax and FoIP servers, has acquired EasyLink Services International, the leading provider of Internet fax services to enterprises, for $7.25 per share in cash, for a total of approximately $310 million, inclusive of debt. EasyLink has about 550 employees and trailing twelve-month revenues of approximately $186 million. The purchase skyrockets Open Text to the number two supplier of overall Internet fax services, behind j2 Global, which leads the market for individual Internet fax services.  Last year, EasyLink had about twice the share of j2 in the enterprise market segment, at 23.7% to 12% for j2.  Open Text had revenues of $90 million in the fax server arena in 2010 which gave it about a quarter of the total market. 

OpenText is the world's largest independent provider of Enterprise Content Management software with $1 billion in revenue and support for approximately 46,000 customers and millions of users in 114 countries and 12 languages.  OpenText also owns RightFax, the leading fax server and FoIP brand in the world and already operates a number of could-based services.

Meanwhile, a number of law firms are investigating potential claims against the Board of Directors of EasyLink Services International related to the proposed acquisition of the Company by OpenText Corp. The investigations concern whether the Board of Directors of EasyLink breache their fiduciary duties to stockholders by failing to adequately shop EasyLink before agreeing to enter into the proposed transaction, and whether the company has disclosed all material information to shareholders about the transaction.  At least one analyst has set a target price for the Company's stock at $8.00 per share while the current deal only nets shareholders $7.25.

But the actual deal is likely to go through, although the EasyLink Board of Directors could be found liable for not doing their fiduciary duty. Right now, the deal is going to the Open Text board of directors for approval, which is likely to be given by mid-summer.

"Easylink is a recognized leader in cloud-based Secure Information Exchange,” said OpenText CEO Mark J. Barrenechea in a statement.  “We see strong opportunities for our mutual customers, partners, employees and product roadmap.  "EasyLink has
demonstrated operational discipline and earnings as reflected in their financial results. Once the transaction is closed, we look forward to the market opportunities of offering a best-in-class combined portfolio of cloud-based services."

OpenText is already a leader in Enterprise Content Management (ECM), and is positioned to deliver a suite of secure solutions in ECM, Business Process management (BPM) and Customer Experience Management (CEM). The company’s large customer base, significant
global distribution and expanding product capabilities puts it in a good position to leverage its business in rapidly growing cloud and mobile environments.  Open Text likely will merge the EasyLink business with existing Internet fax service business which it
acquired recently from MESSAGEmanager. 

OpenText says that the company sees strong opportunities for its mutual customers and partners and there seems little to argue about there. Actually, where they have mutual customers, the opportunities may be limited, but where they have different customers they can try to cross-sell them.  Partners should benefit in that they now will be able to sell fax services instead of or along with fax
servers.  Sounds like a win-win situation.  Clearly, Open Text has wanted a fax service and the EasyLink service gives it the enterprise share, a share that naturally dovetails with its enterprise fax server business. 

One company that probably does not love the purchase is j2 Global, as it now will have a more aggressive and entirely enterprise-ready competitor that will likely cut it off from many of its corporate goals. And it now may be facing a brand name equal to its own eFax: RightFax.

A question that may linger is whether OpenText will be able to grow the business as EasyLink management had been unable to do so for the entire time following the Xpedite acquisition.  What EasyLink management did well was to shore up the bottom line by trading off debt. OpenText will now try to grow the business, with one upgrade being the possibility that it will endow EasyLink with its
RightFax name, which has very broad and good standing the corporate arena.

Unfortunately, Davidson Consulting cannot get answers to its questions at this time and OpenText will be unable to answer them until the acquisition is finalized, probably in mid-summer. When the deal is finalized, Davidson Consulting and AllAboutFoIP.com will provide an update to this article.


Additional RightFax information:  www.FaxServerVM.com

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About the author

Chris Norwood

Chris Norwood has been in the fax technology industry for almost 20 years facilitating techincal support, development, product marketing, comparitive analysis and product management teams at Alcom Corporation, Esker and currently One Touch Global Technologies. He has conducted domestic and international training seminars on the sales, marketing, implementation and variety of various fax server technologies.
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