A Good Deal for Captaris and Open Text—but Impact on Seattle-Area Innovation Is Less Clear
Yesterday we reported on the $131 million acquisition of Bellevue, WA-based Captaris by Open Text, a Canadian software company, and wondered how good a deal it really is for the companies and their employees. (Captaris, a $90 million public company, eked out $220,000 in net income last year, down from nearly $4 million the year before, and it seems like that inability to grow may have forced their hand in seeking a buyer.) Today I had a chance to speak about the deal with Eddie Pasatiempo, formerly senior vice president of global sales and international field operations at Captaris, and now a partner at The Clarion Group (and an Xconomist).
“I think it’s a good deal for Captaris and a good deal for Open Text,” says Pasatiempo. “There are a lot of synergies there. Strategically it’s a nice fit, they complement each other…I admire [Captaris CEO] Dave Anastasi’s conviction to find the right buyer and the right fit. When you have a deal in hand, you never know if you’re going to get a better deal. The team and the board had value in mind.” Pasatiempo says the size of the deal seems reasonable—stockholders will get $4.80 a share, a 31 percent premium over Wednesday’s closing stock price. “Timing is everything,” he says. “They took a disciplined approach in terms of finding the best value for shareholders…As a shareholder of Captaris, I’m happy.”
Pasatiempo points to several reasons for the good fit. “The Captaris product suite is filling a gap in [Open Text’s] portfolio. That’s a good thing for both companies. Captaris has a terrific distribution channel, with almost 2,000 partners globally; they have good international presence with their product. Another thing is, Captaris boasts a terrific client base.” He says Captaris’s fax software and server product, RightFax, is “installed in every one of the Fortune 100 accounts…OpenText can land and expand. The third thing is, there is great recurring revenue from service contracts. And the last thing is the talented people there [at Captaris]. With demographics, baby boomers retiring, talent is always a good thing.” From Captaris’s point of view, he says, “Open Text is a big company [$725 million in fiscal revenue, 3,000 employees]. It’s great for the partner base.”
But Pasatiempo also notes that the deal’s impact on the Seattle-area economy and innovation community is less certain. It will depend on what Open Text decides to do with the Captaris offices here, he says. “Do they keep their presence here? It’s always disappointing when a local company, especially a public company, gets acquired by someone outside. Will they move it all out [to corporate headquarters in Waterloo, Ontario, or global headquarters in the Chicago area]? Now that they’re here, they have access to good talent.”
Open Text has at least one long-standing connection to the Seattle area. Its executive vice president of worldwide sales, John Wilkerson, is from Seattle and probably had a role in the due diligence, says Pasatiempo. Wilkerson previously worked at IBM in Seattle, and at the Bellevue, WA-based software firm Bocada, so he’s very familiar with the area.
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