Transaction Summary Presentation · 67% of Fortune 500 Telecoms 80% of Fortune 500 Utilities Key...
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OpenText Announces Acquisition of GXS Transaction Summary Presentation
November 5, 2013
OpenText Confidential. ©2013 All Rights Reserved. 2
Safe Harbor Statement
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Certain statements in this press release, including statements regarding the proposed transaction between Open Text Corporation (“OpenText” or “the
Company”) and GXS Group, Inc. (“GXS”), the proposed financing of the transaction and expected number of common shares outstanding on completion of
the transaction, the combined company’s plans, objectives, expectations and intentions, leadership in the EIM industry and in B2B data integration services,
creation of the largest information exchange trading network in the world and, the expected size, scope and growth of the combined company’s operations
and the market in which it will operate, expected synergies, as well as the expected timing and benefits of the transaction, may contain words such as “could”,
“expects”, “may”, “should”, “will”, “anticipates”, “believes”, “intends”, “estimates”, “targets”, “plans”, “envisions”, “seeks” and other similar language and are
considered forward-looking statements or information under applicable securities laws. These statements are based on the Company’s current expectations,
estimates, forecasts and projections about the proposed transaction and the operating environment, economies and markets in which the Company and GXS
operate. These statements are subject to important risks and uncertainties that are difficult to predict, and the actual outcome may be materially different.
These statements reflect beliefs and assumptions which are based on the Company’s and GXS’s perception of historical trends, current conditions and
expected future developments, as well as other factors management believes are appropriate in the circumstances. In making these statements, the
Company and GXS have made assumptions with respect to: the ability of the Company and GXS to achieve expected synergies and the timing of same; the
ability of the Company and GXS to predict and adapt to changing customer requirements, preferences and spending patterns; the ability of the Company and
GXS to protect their intellectual property; future capital expenditures, including the amount and nature thereof; trends and developments in the information
technology and financial sectors and other sectors of the economy which are related to these sectors; business strategy and outlook; expansion and growth of
business and operations; credit risks; anticipated acquisitions; future results being similar to historical results; expectations related to future general economic
and market conditions; and other matters. The Company’s and GXS’s beliefs and assumptions are inherently subject to significant business, economic,
competitive and other uncertainties and contingencies regarding future events and as such, are subject to change. The Company’s beliefs and assumptions
may prove to be inaccurate and consequently the Company's actual results could differ materially from the expectations set out herein.
Actual results or events could differ materially from those contemplated in forward-looking statements as a result of risks and uncertainties relating to the
transaction and financing thereof, including: (a) the risk that the businesses will not be integrated successfully or such integration may be more difficult, time-
consuming or costly than expected, which could result in additional demands on OpenText’s resources, systems, procedures and controls, disruption of its
ongoing business and diversion of management’s attention from other business concerns; (b) OpenText’s significantly increased levels of indebtedness as a
result of the proposed transaction, which could limit OpenText’s operating flexibility and opportunities; (c) OpenText’s inability to complete the anticipated
financing as contemplated by the commitment letter prior to the contractually required time for closing of the proposed transaction or otherwise secure
favorable terms for such financing; (d) the possibility that certain assumptions with respect to GXS or the proposed transaction could prove to be inaccurate;
(e) failure to receive, delays in the receipt of, or unacceptable or burdensome conditions imposed in connection with, all required regulatory approvals and the
satisfaction of the closing conditions to the proposed transaction; (f) the potential failure to retain key employees of OpenText or GXS as a result of the
proposed transaction or during integration of the businesses; and (g) disruptions resulting from the proposed transaction, making it more difficult to maintain
business relationships.
For additional information with respect to risks and other factors which could occur, see the Company’s Current Report on Form 8-K filed on November 5,
2013, Annual Report on Form 10-K, including Part I, Item 1A, “Risk Factors” therein, Quarterly Reports on Form 10-Q, other Current Reports on Form 8-K and
other securities filings with the Securities and Exchange Commission (the “SEC”) (which are available at the SEC’s website at www.sec.gov) and other
securities regulators. Many of these factors are beyond the Company’s control. Unless otherwise required by applicable securi ties laws, the Company
disclaims any intention or obligations to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities. The common shares of OpenText will only be
issued pursuant to the terms of the Merger Agreement to holders of GXS capital stock that are “accredited investors” under the U.S. Securities Act of 1933, as
amended.
OpenText Confidential. ©2013 All Rights Reserved. 3
OpenText Has A Proven History of Acquisitions
Customer win:
Emergency Medicine
Physicians Information
Exchange Discovery CEM BPM ECM
Source: OpenText
OpenText Confidential. ©2013 All Rights Reserved. 4
OpenText Announces Acquisition of GXS Strategic Rationale
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INFORMATION
EXCHANGE
New services with market
leading B2B Integration and
Messaging Services
INDUSTRIES
Strong focus on Financial
Services, Manufacturing,
CPG and Retail
CLOUD
SERVICES
Global, growing
managed services and
SaaS applications
business
ADJACENCY
Marquee install base with
ability to cross sell adjacent
products and services
TECHNOLOGY
GXS Trading Grid® with
550,000 trading partners,
14b transaction / year
MARKETS
Stronger presence in US,
Latin America, ASIA, Japan
BUYERS
Extend EIM buyers to
include Procurement and
Supply Chain, Accounting &
Treasury
SOFTWARE
B2B Integration Gateways,
and EDI/XML Translators
OpenText Confidential. ©2013 All Rights Reserved. 5
Finance Manufacturing Retail CPG Services Auto Government Energy &
Utilities Healthcare
Natural
Resources
On Premises | Cloud
ECM EIM EIM Cloud Services
EIM Platform + Information Exchange + EIM Trading Partners
Information Exchange (IX) B2B Integration Services
EIM Platform EIM Trading Partners
16B+ Transactions
600K+ Trading Partners
EIM Pillars
EIM Buyers
EIM Sources
EIM Community
• ECM
• CEM
• BPM
• Discovery
• Developer
• Analytics
• CIO
• CFO
• CMO
• CLO
• Procurement
• Customers
• Partners
• Vendors
• Suppliers
• ODMS
• Insurers
• 3PL
• Carriers
• Financial
Institutions
• ERP
• CRM
• MRP
• EIM
Cloud | On Premises
• Managed File Transfer
• Secure Email
• Fax
• Notification & Alerts
• B2B Managed Services
• SaaS Applications
• EDI Network
• Document Capture
OpenText Confidential. ©2013 All Rights Reserved. 6
Transaction Details(1)
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Transaction announced November 5, 2013
Purchase Price of $1.165b
Purchase price is 2.4x FY12 total revenues
Financing commitment of $800m of Debt, $265m Cash, $100m of Equity
Targeting to onboard GXS to the OpenText operating model within 2 years
Targeting to be accretive to adjusted earnings for Fiscal Year 2014
Targeting to close within 90 days of announcement
Transaction is subject to customary closing conditions
(1) All dollar amounts in this presentation are in U.S. Dollars unless otherwise indicated.
OpenText Confidential. ©2013 All Rights Reserved. 7
About GXS
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Leading provider of B2B Integration Services
B2B Integration market segment is estimated to be $5b by 2016 (Gartner, Competitive
Landscape: Integration Brokerage Published: 26 November 2012)
Global HQ in Gaithersburg, MD. EMEA HQ in Sunbury, UK. APAC HQ in Hong
Kong, PRC. Latin America HQ in Sao Paolo, Brazil. Japan HQ in Tokyo.
2,889 employees in 20 countries with 40 locations serving customers in 60
countries.
Marquee Customer base with over 50% of the Forbes Global 1000
FY12 Revenues of $487.5 million
FY12 Adjusted EBITDA of $146.5 million*
Leading B2B integration cloud - GXS Trading Grid® - with over 550,000 trading
partners
More company information can be found on www.gxs.com
*See slide 18 for reconciliation between Non-GAAP measures to GAAP measures
OpenText Confidential. ©2013 All Rights Reserved. 8
The Business Integration Challenge GXS Solves
Source: GXS
OpenText Confidential. ©2013 All Rights Reserved. 9
The Cloud Platform: GXS Trading Grid
Source: GXS
OpenText Confidential. ©2013 All Rights Reserved. 10
GXS Solution Overview
550k+ Trading
Partners
Source: GXS
68% of Fortune 500
50%+ of Global 1000
OpenText Confidential. ©2013 All Rights Reserved. 11
GXS Products and Services
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Messaging Services Managed Services B2B Software &
Services
Data
Synchronization
Description
• Global B2B integration
platform that provides a link
between internally hosted
B2B gateway software
platforms.
• Provides for the secure,
automated and reliable
exchange of unstructured
business documents across
enterprises
• Comprehensive B2B
outsourcing service that
includes all of the
hardware, software and
staff required to manage an
entire B2B program
• Provides mapping and
Translation, Visibility
Dashboards, Business
Partner Onboarding,
Program Management and
Error Resolution
• Specialized B2B
integration gateways,
managed file transfer,
and high-performance
desktop EDI translators
• Allows customers to
deploy B2B integration
gateways on their
premises
• Catalogue service for
publishing, brand, price,
promotion, packaging,
weight, tax and regulatory
data for each global trade
item (“GTIN”)
• Enables the exchange of
product and price
information between the
suppliers of consumer
products and the retailers
that sell them
Key Features
• Value Added Network
• Protocol Mediation
• Audit Trails
• Supply Chain Visibility
• Invoicing
• PO to Cash
• Data Quality and
Compliance
• WEB EDI
• Process Administration
• Trading Community
Enablement
• Customer Premise
Software
• Connectivity
• Transformation
• Catalogs
Key
Advantages
• Established Global
Presence
• Large scale infrastructure
• Highly reliable, secure and
resilient platform
• End-to-end services across
entire value chain
• Extensive industry
expertise
• Successful track record of
implementation for
marquee clients
• Software designed for
the unique means of the
multi-enterprise B2B
data flows
• Supports “any-to-any
mapping and translation
• Enables “publish and
subscribe” model to help
synchronize supply chains
using standardized product
information
Source: GXS
OpenText Confidential. ©2013 All Rights Reserved. 12
Case Study – Global Financial Services Firm
OPENTEXT OPENTEXT HIGHLY CONFIDENTIAL. DRAFT. NOT AUDITED Source: GXS
OpenText Confidential. ©2013 All Rights Reserved. 13
Case Study – Global Pharmaceutical Manufacturer
OPENTEXT OPENTEXT HIGHLY CONFIDENTIAL. DRAFT. NOT AUDITED Source: GXS
OpenText Confidential. ©2013 All Rights Reserved. 14
Diverse, Broad Base of Marquee Customers
OPENTEXT
Financial
Services Retail
Consumer
Goods Manufacturing Hi-Tech
Key Stats
80% of Fortune Top 20
Retailers
56% of Top 50 Global
Retailers
100% of Fortune 500
Apparel
Key Stats
9 of Top 10 Computer
OEMs
9 of Top 10
Semiconductor
8 of Top 10
Distributors
Strong presence
throughout Asia
Key Stats
85% of Fortune 500
Banking and Savings
Institutions
Global presence in
all
major banking
centers worldwide
Key Stats
85% of Fortune Top 20
Consumer Packaged
Goods (CPG)
88% of Fortune Top 50
CPG
90% of Fortune 500
CPG
Other
Key Stats
70% of Fortune 500
Transportation &
Logistics
67% of Fortune 500
Telecoms
80% of Fortune 500
Utilities
Key Stats
83% of Fortune 500
Industrial
Manufacturers
80% of Top 10
Automotive OEMs
79% of Fortune 500
Aerospace & Defense Source: GXS
GXS customer base spans major industry verticals with leading players as customers, including over 68% of the U.S. Fortune 500 and
~50% of the Forbes Global 1000(2)
(2) Forbes Global 1000 is an annual ranking of public companies in the world by four metrics: sales, profit,
assets, and market value (reflects CY2012 list).
OpenText Confidential. ©2013 All Rights Reserved. 15
Summary
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Proven history of acquisitions
Strong strategic rationale
Evolution to EIM Cloud Services
Financing commitment of $800m of Debt, $265m Cash, $100m of Equity
Targeting to onboard GXS to the OpenText operating model within 2 years
Targeting to be accretive to adjusted earnings for Fiscal Year 2014
Targeting to close within 90 days of announcement
Transaction is subject to customary closing conditions
OpenText Confidential. ©2013 All Rights Reserved. 16
Unleashing the Power of Information
OpenText Confidential. ©2013 All Rights Reserved. 17
Appendix A
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In addition to reporting financial results in accordance with U.S. GAAP, GXS Worldwide, Inc. (the Company) provides certain financial
measures that are not in accordance with U.S. GAAP (non-GAAP).These non-GAAP financial measures have certain limitations in that
they do not have a standardized meaning and thus the Company's definition may be different from similar non-GAAP financial measures
used by other companies and/or analysts and may differ from period to period. Thus it may be more difficult to compare the Company's
financial performance to that of other companies. However, the Company's management compensates for these limitations by providing
the relevant disclosure of the items excluded in the calculation of these non-GAAP financial measures both in its reconciliation to the
U.S. GAAP financial measures and its consolidated financial statements, all of which should be considered when evaluating the
Company's results.
The Company uses these non-GAAP financial measures to supplement the information provided in its consolidated financial statements,
which are presented in accordance with U.S. GAAP. The presentation of non-GAAP financial measures are not meant to be a substitute
for financial measures presented in accordance with U.S. GAAP, but rather should be evaluated in conjunction with and as a
supplement to such U.S. GAAP measures. OpenText strongly encourages investors to review its financial information in its entirety and
not to rely on a single financial measure. The Company therefore believes that despite these limitations, it is appropriate to supplement
the disclosure of the U.S. GAAP measures with certain non-GAAP measures defined below.
The Company believes the provision of supplemental non-GAAP measures allow investors to evaluate the operational and financial
performance of the Company's core business using the same evaluation measures that management uses, and is therefore a useful
indication of OpenText's performance or expected performance of future operations and facilitates period-to-period comparison of
operating performance (although prior performance is not necessarily indicative of future performance). As a result, the Company
considers it appropriate and reasonable to provide, in addition to U.S. GAAP measures, supplementary non-GAAP financial measures
that exclude certain items from the presentation of its financial results in this presentation.
The following charts provide (unaudited) reconciliations of U.S. GAAP-based financial measures to non-U.S. GAAP-based financial
measures for the following periods presented:
Use of Non-GAAP Financial Measures
OpenText Confidential. ©2013 All Rights Reserved. 18
Reconciliation Between GAAP Net Income and Non-GAAP
Adjusted EBITDA (GXS Worldwide, Inc.)
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GXS WORLDWIDE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Adjusted EBITDA
(In thousands)
(Unaudited)
2012 2011 2013
Net income (loss) ($10,149) ($1,259) ($10,027)
Adjustments:
Income tax expense 3,883 6,784 1,923
Interest expense, net 84,649 82,755 42,135
Depreciation and amortization* 56,485 55,680 27,525
EBITDA $ 134,868 $ 143,960 $ 61,556
Stock compensation expense 907 733 582
Other (income) expense, net 5,129 2,237 3,739
Restructuring charges 1,542 2,469 1,219
Merger and acquisition fees 3 227 -
Loss on disposition of assets - - -
Integration costs (1) - 154 -
Deferred income adjustment (2) 25 1430 -
Management fees 4,000 4,000 2,000
Total adjustments 11,606 11,250 7,540
Adjusted EBITDA $146,474 $155,210 $69,096
____________
*Depreciation $36.983M, Amotization $19.502M
(1) Integration costs represented certain incremental operating expenses associated with the integration of the
Inovis business
(2) Purchase accounting requires that deferred income of an acquired business be written down to fair value of the
underlying obligations plus associated margin at the date of acquisition.
Year Ended December 31 Six Months Ended June 30
The above information is extracted from previously reported public filings made by GXS Worldwide Inc. and Subsidiaries, in their annual
and quarterly reports filed under forms 10K/Q.