Published on November 8th, 2021 📆 | 7726 Views ⚑0
Dallas cybersecurity firm Zix sells to Canadian company in deal valued at $860 million
Zix Corp., a Dallas provider of cloud email security, is being acquired by an Ontario company in a deal valued at $860 million.
The deal, announced Monday, comes after Zix conducted a strategic review following unsolicited offers from multiple parties, Zix Chairman Robert Hausmann said in a statement.
Zix looked at more than 70 potential partners over a number of months before landing on OpenText, a Canadian provider of information management solutions, he said. OpenText is one of Canada’s largest software firms, growing through a series of acquisitions into a company with $3.4 billion in annual revenue and 14,300 employees as of June 30.
OpenText will bring Zix the resources and product capabilities it needs for the next stage of growth, Zix CEO Dave Wagner said in a statement. Zix was founded in 1998 and reported $218.5 million in revenue for 2020.
OpenText is expected to pay $8.50 per share in cash. The deal price represents a 16% premium to the average price of the 20 days prior to Oct. 18 when Reuters first reported that Zix was considering selling the company.
The acquisition drew a tepid response from investors.
OpenText, which trades on Nasdaq under ticker OTEX, saw its shares rise 0.7% Monday to close at $51.97. Zix shares closed down 2.6% at $8.51. Its stock had climbed about 20% over the past year.
The deal for Zix comes after a strong period of growth, partly from acquisitions. It acquired Gulf Breeze, Fla.-based cybersecurity firm AppRiver for $275 million in early 2019. In November 2020, it acquired CloudAlly, which helps businesses with cloud-based data backup.
The deal with OpenText is expected to close within 90 days, subject to regulatory and shareholder approval.
Monday was a big day for Zix as it also announced financial results for the three-month period that ended Sept. 30. Quarterly revenue was $64.9 million, a jump of 18% from the same period last year. Net loss was $2.4 million, which represents 242.9% more than what it lost in the same quarter of 2020.
Zix also reported a record of over 103% net dollar revenue rate, which is a measure of the percentage of recurring revenue retained from existing customers over time, Wagner said in the earnings announcement.
“This achievement is a direct reflection of Zix’s successful transformation into a cloud-first organization and underscores the success we are having retaining customers, adding customers onto Secure Cloud, and selling CloudAlly backup into our base,” said Wagner, who has served as CEO since January 2016.