OpenText to Lay Off 8% of Workforce, Fueled by $5.8 Billion Micro Focus Acquisition

OpenText will lay off 8% of its workforce, the company said on Tuesday. The cybersecurity firm has more than 14,000 employees in 60 offices worldwide.

The announcement was buried at the bottom of an OpenText press release announcing the closing of the cybersecurity firm’s $5.8 billion acquisition of British rival Micro Focus. Micro Focus, is an enterprise software provider that helps customers accelerate their digital transformations.

“Consistent with previously announced cost synergies of $400 million, expect to balance the combined company through an approximate 8% workforce reduction due to the acquisition of Micro Focus,” the company said in the release.

Still Many Layoff Unknowns

OpenText did not say when these cuts will occur.

OpenText’s Mark Barrenechea

Mark Barrenechea is OpenText CEO & CTO.

“I would like to welcome Micro Focus customers, partners and employees to OpenText,” Barrenechea said. “Digital life is life, and with Micro Focus’ great products and talent, we will help organizations of all sizes accelerate their digital transformation.”

Barrenechea added: “We have a structured and disciplined approach to M&A. The last six months of planning has led us to a defined integration plan to deliver on our committed outcomes. We are ready and excited about winning the information management market, strong customer outcomes and company growth and expanded cash flows.”

The acquisition will allow OpenText to help enterprise professionals secure their operations, get insight into their information and better manage “increasingly hybrid and complex digital fabric,” Barrenechea said.

The company will have access to a new generation of tools. Those include cybersecurity, digital operations management and applications modernizations and delivery. Artificial intelligence and analytics will also play a critical role in accelerating organizations’ digital transformation, OpenText said.

OpenText has been a big industry player in recent years, buying up security companies Webroot, Carbonite and more.

Contracting Cybersecurity Markets?

Eric Parizo is managing principal analyst at Omdia Cybersecurity. He said the company’s staff reductions aren’t a surprise.

Omdia’s Eric Parizo

“Both OpenText and Micro Focus are two very large organizations, and no doubt one of the key benefits of the acquisition is cost synergies,” Parizo said. “This typically means addressing redundancies in areas like sales, marketing and business support functions. I expect that to be the case here.”

As for the acquisition, he said OpenText is looking to scale its business as quickly as possible. The Micro Focus acquisition is a rapid way to buy market share in several segments complimentary to those in which it already operates. This includes cybersecurity.

“However, given the sizable portfolio of legacy solutions Micro Focus owned, amassed after years of its own acquisitions, I expect that the process of reconciling the product portfolios will be one of the more complex efforts we’ve seen in some time,” Parizo said.

He added: “In a year when many believe the IT and cybersecurity markets may be contracting, or at least slowing growth, OpenText deserves credit for its bold and aggressive approach to take advantage of an opportunity to grow while competitors may be retrenching.”