Open Text Corp. Tuesday said it would buy German software firm IXOS Software AG to add content management expertise to its collaboration and knowledge management tools.


Ont.-based Open Text is offering a cash consideration of 9 Euros per IXOS share (about US$10.46) or 0.2610 of an Open Text share.

It will take roughly a year to produce a suite of products that combines content management and collaboration, said Open Text CEO Tom Jenkins. “”It’s necessary to have a balance,”” he said. “”Really, what all solutions are about in this space . . . is really about the movement of documents and word-based text.””

Integration should be fairly swift, he added, since most software written today is built on common standards and interfaces. “”Software is becoming less of a midnight coder’s dream to more of a rigourous engineered product. . . . There is a common underlying structure in the way code is written,”” he said.

IXOS has recently integrated new elements to its own software, said the CEO of the Hamburg-based company, Robert Hoog. IXOS made deals for Obtree (Web content management) and Powerwork (business process management) in January and will begin shipping combined product next month.

Plans are underway to combine IXOS and Open Text software, but Open Text will maintain separate operations in North America and Europe. The company’s collaboration and knowledge management focus will remain in Waterloo and Chicago, while a Munich office will serve as head of European operations and concentrate on content management and archiving.

IXOS has 900 employees in 17 countries, bringing Open Text’s head count to about 2,200 employees.

Open Text will also inherit IXOS’s relationship with German giant SAP AG. IXOS has a 15-year history with SAP — the companies co-developed an archiving interface for SAP’s customer relationship management (CRM) module. In addition, SAP holds a 4.5 per cent ownership stake in IXOS.

Just two months ago Open Text bought another German content management company, Gauss Interprise, for approximately US$11 million. Other recent deals in this space include EMC, which made a play just last week for Documentum in a deal worth substantially more at US$1.7 billion.

“”Our market is clearly consolidating,”” said Open Text CEO Tom Jenkins. “”We believe that it has met an inflection point in which we are now moving to broad market awareness. We see two or three leaders that should be able to generate revenues in the $1-billion range.””

But Open Text may not be one of those companies left standing. IDC Canada Ltd. analyst Warren Shiau said that while the proposed Open Text purchase of IXOS makes sense from a product and infrastructure point of view, Open Text could become an acquisition target itself as larger companies seek to consolidate.

“”When one of them starts to go on the acquisition trail and build out the functionality . . . it often forces the others to follow suit,”” he said.


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