After a series of failed hostile takeovers, one of Canada’s best-known software companies has finally managed to find a firm that sees a future under its wing.
Open Text Corp. Thursday said it would acquire Centrinity Inc. through a cash for share deal valued at $1.26 per share. Centrinity, based in Richmond Hill, Ont., said its board of directors unanimously approved the transaction and will call a special meeting of shareholders as soon as possible to approve it, possibly by the next quarter.
The 12-year-old Centrinity makes a single product, FirstClass, a high-end groupware and unified messaging server that competes with Novell’s Groupwise and IBM’s Lotus Notes. Open Text is best known for its Livelink software, a collaboration and knowledge management tool.
The acquisition comes just three days after Open Text introduced content management capabilities into Livelink. For example, a Livelink user could use the software to publish content to a Web site and dynamically extract other content from databases or enterprise applications at the same time.
Open Text has shown an interest in content management for some time. In 1999 the company made an attempt to buy PC Docs, whose Fulcrum document management applications were used by large customers like law firms. The proposed takeover stirred controversy in the industry, particularly after analyst firms like Meta Group and IDC warned that an acquisition by Open Text posed a threat to PC Docs users. After a protracted bidding war, PC Docs was eventually purchased by Hummingbird Communications.
Earlier this year, Open Text took another kick at the can when it proposed purchasing Ottawa-based Accelio (formerly Jetform), which also specialized in a form of document management. Accelio instead was acquired by Adobe not long afterwards.
Centrinity COO John Myers said the firm was attracted to Open Text because it could offer assurance to customers that it had solid financial backing, a question that he said is often raised by CIOs. While Centrinity has approximately eight million FirstClass users and Open Text approximately six million Livelink users, there is little overlap within the two customer bases, he said.
“”Those 14 million users, they truly do appear to be completely additive,”” he said, adding that FirstClass features are not used like those of Open Text’s Livelink or MeetingZone, which help groups working together at the same time. “”It’s a different kind conferencing . . . we’ve focused on technologies that enable groups to work together, but in an asynchronous fashion. They’re distributed around the world or perhaps they’re teachers in different classes.””
Open Text executive vice-president Anik Ganguly said the unified messaging capabilities within FirstClass complement the company’s vision to integrate collaborative applications within everyday work processes. Failure to do this is what has stalled knowledge management in the enterprise, he said.
“”It requires you to put information into the system — and that’s extra work,”” he said. “”We have to crack this input barrier, we have to solve this problem.””
Alan Pelz-Sharpe, vice-president of research at Ovum North America, said content management is a slow but growing market thanks to the challenges users face in sorting all the voice mail, e-mail, CAD drawings and other unstructured data in the enterprise. While some companies have focused on a single aspect of this space, like digital assets or document management, Pelz-Sharpe predicted more acquisitions by large firms in order to cover the range of customer needs.
“”There is consolidation, and there has to be,”” he said. “”If you’re a tiny player you only have part of the solution — it’s a pretty grim picture.””
Myers said Centrinity’s key customers have been in education and government, while Open Text has secured client wins with large corporations like Unilever Bestfoods.
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