OpenText to buy EasyLink Services for $232 million
TORONTO (Reuters) - Business software company Open Text Corp (OTC.TO) said on Tuesday it agreed to acquire EasyLink Services ESIC.O, a provider of cloud-based messaging services, for $232 million, in a move aimed at tapping business within the growing Cloud and mobile environments.
Open Text said it will pay $7.25 a share in cash for each share of EasyLink, a premium of 14 percent to EasyLink's Monday closing price of $6.36 on the Nasdaq.
"Easylink is a recognized leader in cloud-based secure information exchange," OpenText CEO Mark Barrenechea said in a statement, adding that the Canadian software maker sees strong opportunities to connect the dots with mutual customers and partners that the companies share.
Waterloo-based OpenText, Canada's largest software maker, also reported a slight decline in its fiscal third-quarter net income, due to weak results from its license revenue segment.
"License revenue performance was impacted by sales execution issues in North America," said Barrenechea, who recently took the reins at OpenText. "We've moved swiftly to take corrective actions and are confident that our organizational changes and enhancements will have a positive impact on our execution moving forward."
Net income in the quarter ended March 31 fell to $34.8 million or 59 cents a share, down from a profit of $35.8 million, or 61 cents a share, a year earlier.
Excluding one-time items, earnings in the period fell to $59.2 million, or $1.01 a share, from $81.7 million, or $1.39 a share.
Although license revenues fell, total revenue in the quarter rose 11 percent to $292.3 million, driven by gains in the company's customer support and service segments.
(Reporting By Euan Rocha in Toronto and Supantha Mukherjee in Bangalore; editing by M.D. Golan)
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