Open Text Corporation · TSX:OTEX
Open Text — Merger or Acquisition (August 2022)
26 slides from Open Text's merger presentation, Aug 25, 2022
Slide 1: OpenText to Acquire Micro Focus International plc
OpenText to Acquire Micro Focus International plc (LSE: MCRO, NYSE (ADS): MFGP) NASDAQ: OTEX | TSX: OTEX August 25, 2022
Slide 2: Safe Harbor and IP Statement
Safe Harbor and IP Statement This presentation is not intended to and does not constitute or form any part of an offer to purchase, or solicitation of an offer to buy, any securities, nor shall there be any sale of securities in any jurisdiction in which such offer to purchase would be unlawful. Thi
Slide 3: Call Participants
Call Participants Mark J. Barrenechea Madhu Ranganathan CEO & CTO EVP, CFO OpenText ©2022 All rights reserved 3
Slide 4: OpenText: A Proven Track Record
OpenText: A Proven Track Record Market Expansion and Value Creation Today Micro Focus TODAY’s Announcement Expands Digital Our Mission: Transformation Capabilities Expanding OpenText’s Leadership in We power and protect information Enabling Digital Transformations 2021 Zix: a top Our Purpose: 2022 M
Slide 5: Transaction Overview
Transaction Overview Purchase Price and Closing Conditions Projected Financial Impact Approximately • One of the world’s largest software and cloud companies • $6.0B Enterprise value (inclusive of Micro Focus’ cash and debt) • 2.2x pro forma TTM Micro Focus revenues(1) • Approximately doubling our T
Slide 6: Industrial Thesis
Industrial Thesis Increasingly complex world… …creates an urgent imperative to accelerate Digital Transformations • Supply chain $1T+ in business value expected to be unlocked through Cloud adoption(1) of executives cite talent availability as main adoption risk factor for IT automation • Trust and
Slide 7: Enhancing Leadership in Enabling Digital Transformations
Enhancing Leadership in Enabling Digital Transformations Information Management(1) Strategic Importance of Micro Focus Security 22% Content Services • 46 years of innovation 26% • Significant expansion of addressable market OpenText $92B • Expands strategic presence in high value businesses o Enhanc
Slide 8: OpenText and Micro Focus Snapshot
OpenText and Micro Focus Snapshot OpenText Micro Focus(3) $3.5B Waterloo, CA Total Revenue F’22 ($M) by Product Type: $2.7B Newbury, UK Total Revenue TTM ($M) F’22 Revenue Headquarters Headquarters 8% TTM Revenue(4) Maintenance: $1,705 (FY ended June 30, 2022) 25% SaaS & Other Recurring: $136 10% Co
Slide 9: Strategic Rationale
Strategic Rationale Significant Free Cash Flows and Return Micro Focus to Organic Growth OpenText is well-positioned for this acquisition Right Time Right Asset Right Opportunity for Significant Value Creation • We are executing very well Micro Focus Strengths Revenue Growth • Strong financial posit
Slide 10: Expands Strategic Presence in High Value Businesses
Expands Strategic Presence in High Value Businesses Increases Strategic Value to Customers OpenText Micro Focus Information Management for Organizations of All Sizes Applications Delivery & Modernization Service Market Business Network Experience Content Services Cyber Resilience Advanced Analytics
Slide 11: Micro Focus: A Market Leader in Key Industry Segments
(1) Micro Focus: A Market Leader in Key Industry Segments Employee innovation Market Leading Innovation ~11,000 Employees ~40% Of employees dedicated to Research & Development 1. Source: various Forrester and Gartner reports OpenText ©2022 All rights reserved 11
Slide 12: Strengthens and Deepens Presence in Global 10,000
Strengthens and Deepens Presence in Global 10,000 OpenText with Micro Focus 20 out of top 20 Manufacturing Significantly expands 20 out of top 20 Oil & Gas OpenText’s global presence(2) 98 20 out of top 20 Telecom North 18 out of top 20 Utilities EMEA APJ* America 20 out of top 20 Federal Government
Slide 13: Growth Opportunity: Cloud and SaaS
Growth Opportunity: Cloud and SaaS Uplift Micro Focus Customers to Cloud OpenText Cloud Micro Focus SaaS OpenText: Proven Record of F’22 Revenue(1) Future Opportunity Uplift to Cloud $1,535M $136M Cloud and Subscriptions Revenue Micro Focus’ SaaS and Other 44% of total revenue 5% of total revenue ($
Slide 14: Growth Opportunity: Customer Support and Maintenance
Growth Opportunity: Customer Support and Maintenance Powerful Source of Recurring Cash Flow OpenText Micro Focus Customer Support Maintenance(1) OpenText Future Opportunity F’22 $1,705M $1,331M Customer Support Revenue Micro Focus’ 38% of total revenue 64% of total revenue (US$M) Maintenance Revenue
Slide 15: Growth Opportunity: Annual Recurring Revenue
Growth Opportunity: Annual Recurring Revenue Uplift Micro Focus Customers to the Cloud and Apply OpenText Best Practices to Renewals Compelling Products and Customer Satisfaction are the Foundations for Growth OpenText Micro Focus OpenText Best Practices ARR(1) ARR(3) • Feature-rich product releases
Slide 16: Growth Opportunity: License and Professional Services
Growth Opportunity: License and Professional Services Innovate for Off-Cloud and Offer Micro Focus Customers Multiple Paths to OpenText Cloud License Professional Services OpenText Micro Focus OpenText Professional Micro Focus License License(1) Services Consulting(1) F’22 F’22 $358M $656M $270M $16
Slide 17: Products & Technology: Accelerate Micro Focus Innovation
Products & Technology: Accelerate Micro Focus Innovation Apply OpenText’s Strong Track Record of Innovation to Micro Focus Titanium Micro Focus (1) Red Oxygen Blue Carbon Cloud Editions (2022) Product Group TTM ($M) (2013) (2015) (2020) Run Anywhere | Off-Cloud | Private Cloud | Public Cloud | API A
Slide 18: Significant Expansion in GTM Coverage and Partners
Significant Expansion in GTM Coverage and Partners Leverage OpenText’s Channel and Digital Distribution Capabilities Target Organizations Go-to-Market Motions OpenText Micro Focus Large Direct Sales 3,000+ ~2,300 sales Enterprise Global Accounts field facing incremental Enterprise Accounts professio
Slide 19: Powerful Cash Generation and Future Synergies
Powerful Cash Generation and Future Synergies OpenText Micro Focus Expected Cost Synergies A-EBITDA(1) FCF(1) A-EBITDA(2) A-FCF(3) $1.3B $889M $942M $253M A-EBITDA %(1) FCF % of Total A-EBITDA %(2) A-FCF % of Total Revenues(1) Revenues(4) • Including Micro Focus’(5) previously announced cost savings
Slide 20: The OpenText Business System
The OpenText Business System Micro Focus Will Benefit from the OpenText Business System Total Growth • Commitment to our Total Growth Strategy, including acquisitions • Accelerated Cloud Growth Total Innovation Total Ecosystem Innovation Building • Our objective to be the leader in each of our marke
Slide 21: Integration Execution Framework
Integration Execution Framework OpenText Continues Strong Execution Today 1st 6 months 2nd 6 months 3rd 6 months F’25+ Pre-Acquisition Post– Acquisition Execution Evolution Micro Focus generates Total growth Engage customers on vision Begin uplift Micro Focus Continue Micro Focus uplift to organic g
Slide 22: Value Creation Model
Value Creation Model Total Revenue Growth • Total revenue growth • Sustained organic growth Total Revenue Growth • Uplift Micro Focus customers to the cloud • Improve Micro Focus renewal business • Expected cost synergies Value • Upper quartile A-EBITDA and expansion Profitability • Upper quartile F
Slide 23: Rapid 8 Quarter Deleveraging Program
Rapid 8 Quarter Deleveraging Program(1)(2) Uplift Micro Focus products, go-to-market and 10 consecutive years of renewals to OpenText Net Debt to A-EBITDA(3) standards increased dividends paid Dividends Paid (US$M) Maintain upper quartile A-EBITDA 3.8x <3x $238 $211 Maintain upper quartile $169 $189
Slide 24: Our Commitments
Our Commitments Return Micro Focus to organic growth Upper quartile A-EBITDA and expansion Accelerate Micro Focus cloud growth and Upper quartile Free Cash Flow and expansion improve Micro Focus renewals Leverage proven OpenText Business System to drive accretive integration of Micro Focus Rapid 8-q
Slide 25: Additional Information
Additional Information Disclosure requirements of the UK City Code on Takeovers and Mergers Under Rule 8.3(a) of the UK City Code on Takeovers and Mergers (the Code), any person who is interested in 1 percent or more of any class of relevant securities of an offeree company or of any securities exch
Slide 26: Thank you
Thank you twitter.com/opentext linkedin.com/company/opentext opentext.com