Dallas-Based Email Security Company Zix Acquired by OpenText in $860M Deal

OpenText is integrating Zix with products from two previous acquisitions to create a "powerhouse SMB platform for data protection, threat management, email security, and compliance solutions."

Canadian information management company OpenText has entered a deal valued at $860 million to acquire Dallas-based Zix Corp. Inc.

Zix offers cloud email security, threat protection, and compliance cloud solutions to small and medium-sized businesses (SMBs) in healthcare, finance, and government. Under the terms of the definitive agreement, OpenText will pay $8.50 per share in cash for Zix.

In December 2019, Ontario-based OpenText acquired Carbonite, a could-based data protection provider for SMBs, to give customers what it called the first end-point platform of data protection, endpoint security, intrusion detection, and digital forensics. The intent was to ensure “cyber resiliency and trusted innovation.”

That deal also involved Webroot, which leverages AI and the cloud to put a stop to businesses’ threats before they happen in real time. Carbonite is Webroot’s parent company.

That integration allowed OpenText to have the readiness to expand further into the SMB market, OpenText EVP and CFO Madhu Ranganathan said. The information management solution offered by OpenText—known as “The Information Company”—are powered by OpenText Cloud Editions.

OpenText plans to add Zix to the suite of Carbonite and Webroot products that are within its SMB platform. OpenText CEO and CTO Mark J. Barrenechea expects the result to be a “powerhouse SMB platform for data protection, threat management, email security, and compliance solutions.”

“I look forward to welcoming Zix customers, partners and employees to OpenText,” Barrenechea said in a statement. “Acquisitions of cloud growth assets like Zix highlights our commitment to our total growth strategy and approach to cash-based returns.”

Zix deepens OpenText’s technology

With a focus on protecting business communication, Zix says its easy-to-use solutions make it a leader in email encryption and data loss, advanced threat protection, information archiving, and cloud-to-cloud backup.

The Dallas company wants customers to have more secure data, while meeting all compliance needs. It is publicly traded on the Nasdaq under the ticker ZIXI.

Ranganathan said that Zix is a meaningful addition to OpenText’s cloud revenues, and it will be “immediately accretive to our adjusted EBITDA.” The acquisition follows a strategic review by Zix’s board of directors, which was triggered by unsolicited approaches from multiple parties.

Zix and its financial advisor conducted outreach to more than 70 strategic and financial parties over a number of months. The transaction was unanimously approved by the Zix board.

“Zix will deepen our technology and go-to-market relationship with Microsoft. Further, Zix will bring approximately 5,600 MSPs to OpenText, and create significant cross-sell opportunities in the OpenText and Zix clouds,” Barrenechea said in a statement. “Today’s announcement demonstrates our commitment to winning in both the Enterprise and SMB markets.”

Over the past few years, Zix has used acquisitions and organic initiatives to expand its own product portfolio and customer base.

In January 2019, leadership recognized a “truly monumental day” when Zix acquired AppRiver, a Florida-based provider of cloud-based cybersecurity services, in a $275 million deal. AppRiver was around twice Zix’s size at the time of the announcement, which dramatically increased the Dallas company’s growth.

“OpenText provides the ideal opportunity to help Zix achieve its next phase of growth,” Dave Wagner, Zix’s CEO, said in a statement. “This transaction will bring greater resources and product capabilities, and provide significant benefits to our customers, partners and employees.”

The closing of the deal is subject to the tender of two-thirds of Zix’s common shares outstanding, along with customary regulatory approvals.

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