Canadian software company OpenText to buy Covisint for US $103M
Canadian software company OpenText said it is acquiring Covisint Corp. -- an information technology supplier with deep automotive roots -- in a transaction valued at US $103 million.
The deal comes after a year of speculation Covisint was an acquisition target and pressure from institutional shareholders to sell the company, whose share price has lagged.
OpenText, based in Waterloo, Ont., said Covisint's Internet of Things platform will help OpenText expand in the automotive industry.
Covisint shareholders will receive $2.45 per share in cash for each outstanding share of common stock held, representing a 23-per-cent premium to the prior closing price on June 2, according to a news release issued Monday.
The transaction is expected to close in the third quarter.
For the fiscal year ending March 31, Covisint reported total revenue of US $70.2 million, down eight per cent from US $76 million last year. Its subscription revenue was down four per cent and services revenue down 25 per cent from last year.
Covisint, now based in suburban Detroit, was founded in 2000 as an online marketplace by Ford Motor Co., General Motors and then-DaimlerChrysler. It struggled to generate revenue and was sold to Compuware in 2004. Compuware spun off the company again through an initial public offering in 2013.
The company came under pressure last year from institutional investors to sell itself as its share price has lagged. One of them, San Francisco-based Vector Capital offered to buy the company. Another, Roumell Asset Management LLC, threatened a proxy battle over its demand that the company hire an investment banker and consider going private through a sale.
The company now markets itself as a provider of cloud-based services to companies in the hot space known as the Internet of Things, where sensors connect people with their devices, machines and appliances. A big part of the Internet of Things is connected cars.
"There is no better place for the Covisint Platform, the Covisint team members and our customers at this time in our evolution," Sam Inman, the company's CEO, said in a statement.
Covisint has seen its share price lag and began exploring possible sale options last year.