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Rocket Software to acquire OpenText's AMC for $2.27B by Q2 2024
Tue, 12th Dec 2023

Rocket Software, a global technology company, is set to acquire OpenText's Application Modernization and Connectivity (AMC). The deal is valued at $2.275 billion and is set to close in the second quarter of 2024.

AMC, previously part of Micro Focus, is recognised for its capabilities in application modernisation and suite of leading tools, such as COBOL and host connectivity.

This strategic purchase will complement Rocket Software's offering by allowing customers to seamlessly modernise their applications and enhance their operations in hybrid cloud landscapes.

Rocket Software has remained a trusted collaborator for nurtuing innovation across various organisations, solving complex IT challenges from infrastructure to application development.

With the inclusion of AMC, it will be able to offer a more extensive modernisation portfolio aligning with customers' demands whether they are working on-premises or adopting a hybrid cloud strategy.

The company aims to achieve five strategic objectives with the acquisition of AMC. Firstly, Rocket Software will be able to engage with organisations at any stage of their modernisation journey with a comprehensive product offering spanning from mainframe to hybrid workloads.

Secondly, customers will have more opportunities to draw value from their long-term investments in core applications whilst also exploring and capitalising on new applications and technologies.

Thirdly, the purchase will boost Rocket Software's position as a leader in hybrid cloud, entrenching the company's current customer relationships while fostering sustainable growth in the legacy enterprise IT market.

It's also expected to extend Rocket Software's R&D expertise, encouraging continuous innovation, particularly in emerging realms like generative AI. Lastly, the acquisition will strengthen Rocket Software's standing as the industry's ideal partner for meeting customer requirements and delivering superior customer success.

Commenting on the acquisition, Rocket Software's President and CEO, Milan Shetti, said, "Welcoming the AMC business and its talented team to Rocket Software marks an extraordinary moment for the company, the market, and the thousands of organisations who share in our vision of making the best-of-both-worlds a reality."

Though details on the financial organisation of the deal were disclosed, a combination of new cash equity from existing shareholders, committed debt financing, and cash from Rocket Software's balance sheet is expected to fund the acquisition. Despite leveraging on a secured basis, the company expects the acquisition to be leverage neutral on a total leverage basis when considering the expected synergies.

Rocket Software stated that financial advice for the deal is being provided by RBC Capital Markets, LLC, Barclays Capital., Deutsche Bank Securities, and UBS Securities LLC. Ernst & Young LLP served as Accounting Advisor and Kirkland & Ellis LLP as Legal Advisor to Rocket Software.