Knowledge management software company Open Text has made an offer to buy PC Docs, the document management firm.
Open Text expects to receive an answer from PC Docs today. The offer is for a stock-for-stock exchange, giving PC Docs shareholders one share of Open Text stock for every four shares of PC Docs stock. This values the deal at about $106 million (#64 million), which represents a premium of 35% on the current share value of PC Docs.
Tom Jenkins, CEO of Open Text, said: "We believe there is a natural synergy between the document management customer base of PC Docs and our Web-based collaborative knowledge management products. By joining forces, we believe our combined operations would achieve increased efficiencies and enhanced support for our existing and new customers and would result in increased value for the shareholders of both companies."
Jenkins claimed that Open Text has the Internet technologies that PC Docs customers needs, such as its LiveLink collaborative knowledge management package, which he said would allow PC Docs to extend its applications to the whole enterprise and extranet.
Jeffrey Mann, program director at the Meta Group analyst firm, said: "This would be a good match for Open Text, because (PC Docs) is cheap. It's good for PC Docs shareholders, but bad for its customers, because I can't see its software surviving. Apart from (PC Docs') Fulcrum (search software), this would not be a technology buy; Open Text would be buying customers, which is pretty much what it has done in the past."
Mann was confident that the deal would go through. "Somebody will take PC Docs out; it might look for a white knight (to rescue it), but the merger will probably go through because of the premium (Open Text is willing to pay)," he said.
The terms of the proposal were sent to the PC Docs board on 30 November, and Open Text requested a reply by today.
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