Carbonite Sale Rumors Confirmed: OpenText Shelling Out $1.42 Billion

There have been rumors that Carbonite was going to be acquired for a few months.

Edward Gately, Senior News Editor

November 11, 2019

3 Min Read
Mergers and acquisitions
“Doing your pre-merger due diligence is essential, but we have learned, at times the hard way, that this due diligence shouldn’t just be from a financial standpoint. Getting a full understanding of the way the incoming organization functions from a process, policies and a personal, human component (or ‘HR factor,’ as we’ve come to call it), is key. As the company doing the acquisition, you want to take your time in getting to know the organization you’ve acquired and fully understand the way that they were doing things, presumably successfully, before you came into the picture. Remember that if they were profitable before you merge, they should remain profitable afterward, so you do have some time on your side to cement the courtship before bringing things under one roof.  You need to take your time with that HR factor in an acquisition, but not from a branding perspective. We once learned in an early acquisition, and learned the hard way, that corporate communication, both internal and external, needs to have a set ‘go-live’ date and plan in place well before the transaction.  On that date, you need to have all your ducks in a row so that your two teams coming together as one know exactly what they need to about the company as a whole, its vision, and how the brand is going to go to market in the future. If you let both brands co-exist separately, it will only make ripping the Band-Aid off later more difficult, more time-consuming and more costly as the departing brand becomes more and more embedded.” —Aaron Bradley, VP of marketing, CareWorxShutterstock

OpenText has entered into an agreement to acquire Carbonite, the provider of cloud-based subscription data protection, backup, disaster recovery and endpoint security to SMBs and consumers, for $1.42 billion .

Carbonite has more than 300,000 SMB customers, 14,000 MSPs and 7 million professional users. The acquisition is a continuation of OpenText’s “total growth strategy” both through acquisitions and organic growth, the company said.

The transaction is expected to close within 90 days.


OpenText’s Mark Barrenechea

Mark J. Barrenechea, OpenText‘s CEO and CTO, said this acquisition will further strengthen his company as a “leader in cloud platforms, complete endpoint security and protection,” and will open a new route to connect with customers through Carbonite’s “marquee SMB/(professional user) channel and products.”

“They’ve created an amazing business, scaled cloud service operations and a superior channel distribution organization,” he said. “Data protection and endpoint security are strategic industrial markets that are relevant to all size customers, enterprise, SMB and [professional users]. The total addressable market … for these end markets is over $15 billion and growing mid to mid-to-high single digits.”

Keep up with the latest channel-impacting mergers and acquisitions in our M&A roundup.

Amy DeCarlo, GlobalData’s principal analyst of security and data-center services, tells us that with its Webroot acquisition earlier this year, Carbonite expanded its backup and recovery focus to include endpoint protection.

“OpenText picks up a set of data protection solutions through the Carbonite deal that is a good complement to its existing enterprise information management suite,” she said. “There have been rumors that Carbonite was going to be acquired for a few months. The company’s financials have been somewhat disappointing; however, its recent WebRoot investment makes it an attractive acquisition target.”

Carbonite is the first vendor to combine data protection and endpoint security, and together with OpenText, “we’ll be in a market-leading position for total endpoint protection that also includes digital forensics and endpoint response,” Barrenechea said.

“Once integrated, we expect to increase our annual recurring revenues, deliver strong cloud growth, and expand cloud margins and [operating performance],” said Madhu Ranganathan, OpenText’s executive vice president and CFO. “The resulting growth in cash flows will enable us to maintain a healthy balance sheet, deliver strong earnings, and continue to deliver consistent growth in dividends to shareholders.”

“Following expressions of interest from multiple parties, the Carbonite board conducted a thorough and comprehensive process, which included contact with a number of strategic and financial parties, to identify the best way to maximize shareholder value,” said Steve Munford, Carbonite‘s interim CEO and board president/executive chairman. “Carbonite has expanded its solutions to become a leader in cyber resiliency. We have grown through both organic and inorganic opportunities over the years, enhancing our routes to market, diversifying our customer base, and assembling a talented workforce, while adding meaningful scale. Joining with OpenText is an exciting next step for Carbonite.”

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About the Author(s)

Edward Gately

Senior News Editor, Channel Futures

As news editor, Edward Gately covers cybersecurity, new channel programs and program changes, M&A and other IT channel trends. Prior to Informa, he spent 26 years as a newspaper journalist in Texas, Louisiana and Arizona.

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