IT and Business Insights for SMB Solution Providers

OpenText Buys Zix

The $860 million deal is the latest step in OpenText’s ongoing efforts to build an end-to-end family of cyber protection products encompassing security, backup, and high availability solutions for SMBs and consumers. By Rich Freeman

OpenText has acquired Zix in a move that adds email security and compliance solutions to an increasingly expansive “cyber resilience” portfolio that already included endpoint protection, DNS security, security awareness training, and BDR products. 

The deal, which is valued at approximately $860 million, is the latest in a long string of transactions dating back to Carbonite’s acquisition of Webroot in February 2019 and Carbonite’s subsequent acquisition by OpenText nine months later.

“We are pleased to announce our intent to acquire Zix, and I look forward to welcoming Zix customers, partners and employees to OpenText,” said Mark Barrenechea, OpenText’s CEO and CTO, in a media statement. “We intend to integrate Carbonite, Webroot and Zix products to create a powerhouse SMB platform for data protection, threat management, email security and compliance solutions. Acquisitions of cloud growth assets like Zix highlights our commitment to our Total Growth strategy and approach to cash-based returns.”

Zix has been active in the M&A market itself in recent years. The company bought cloud distributor AppRiver early in 2019 and cloud-based data backup and recovery vendor CloudAlly a year ago.

“The acquisition of Carbonite in December 2019 and its successful integration has given us the confidence and readiness to expand even further into the SMB market,” said OpenText executive vice president and CFO Madhu Ranganathan in a press statement. “Zix brings a meaningful addition to our cloud revenues and will be immediately accretive to our adjusted EBITDA. Once integrated, we expect Zix to contribute to organic growth in cloud and Annual Recurring Revenues, be on the OpenText operating model for profitability and meet our cash-based returns criteria. We remain committed to maintaining a healthy balance sheet, delivering strong earnings, and continuing to invest in our organic growth initiatives.”

OpenText expects the Zix purchase, which it’s funding with existing cash on hand, to close within 90 days.

Adding email security and compliance solutions—along with the modular, integrated cloud productivity, security, and compliance suite Zix rolled out last April—to its Webroot and Carbonite holdings advances OpenText’s ongoing efforts to build an end-to-end family of cyber protection products encompassing security, backup, and high availability solutions for SMBs and consumers.

“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,” said Barrenechea in prepared remarks. “Today’s announcement demonstrates our commitment to winning in both the Enterprise and SMB markets.”

Acronis and Datto are two of several other leading vendors pursuing a similar cyber protection strategy, which reflects the widespread consensus that BDR is an essential last line of defense in a complete layered security stack.

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