Open Text proposes merger to PC DOCS directors
Open Text has submitted a proposal to PC DOCS International's board of directors, suggesting a merger of the company's operations.
PC DOCS shareholders would receive 1 share for every 4 shares of PC DOCS stock, roughly 35% more than PC DOCS' current stock price. Open Text has asked for a response by Tuesday, December 8. PC DOCS today acknowledged receipt of the proposal, but remains tight-lipped about how the company will respond before tomorrow's corporate shareholders' meeting. PC DOCS shares were up 23.6% following today's news; Open Text shares were down 2.4%.
On the face the deal seems to offer stability for PC DOCS, which has seen its share of turmoil in the past year. A big bonus would be the connection to Open Text's Web-based technology -- Docs Open is client-server based. PC Docs also would benefit from a bigger, more diverse customer base; Docs Open is used more often at the departmental level in specific vertical markets, while Livelink is typically seen as horizontal and enterprise-wide.
Open Text CEO Tom Jenkins believes PC DOCS customers would benefit by "having access to a wider range of Web technologies for collaborative knowledge management." They would also have the ability to "extend their applications at the enterprise and extranet levels using Livelink," he said.
Dan Latandre, VP of Product Marketing, added that PC DOCS customers would benefit from Open Text's successful M&A past. Also, Open Text is firmly entrenched in the knowledge management market, a place in which PC DOCS is now positioning itself.
Latandre also said that should the merger go through, PC DOCS' software would likely be used as a document management module connected to Open Text's Livelink product, similar to what has been done with two recent acquisitions, Information Dimension's Basis and the Ontime scheduling software.
Corridor Consulting analyst Russ Edelman sees a potential marriage as beneficial to both parties. " Open Text will take advantage of the Fulcrum offering, a huge installation base and tried and true DM core library services within the windows realm," he said. "For DOCS, they stand to gain as they could now provide a true collaborative offering, more corporate appeal and tremendous name recognition.
The Delphi Group, noting FileNet's trouble digesting both Saros and Watermark, says Open Text has its work cut out. "Open Text is acquiring customer base, at the cost of redundant capability - Open Text, PC DOCS and IDI are all very similar document management products." Open Text would also have to position its native search capabilities with the popular Fulcrum search engine, which would come as part of the PC DOCS package.
Difficulties aside, Delphi sees Open Text's move as a market-shaping consolidation. "This highly visible acquisition would help Open Text carve out a most enviable position for itself in the document management market - establishing themselves as the most widely installed vendor in the market, by far," according to Delphi. "The combined market and technology strengths of Open Text, IDI and PC DOCS could likely be integrated into a product suite that goes beyond simple document management