HP Inc. Unloads Multichannel Marketing Software Assets To OpenText In $315M Deal
HP Inc. on Tuesday sold off its multichannel marketing software assets, which account for about $125 million in annual sales, to enterprise software maker OpenText in a $315 million all-cash deal.
The marketing software assets are targeted squarely at the customer experience management (CEM) market, where Waterloo, Ontario-based OpenText already is a significant player.
OpenText shares were up $1.87, or 3 percent, to $60.31, in late afternoon trading. HP Inc. shares remained relatively unchanged, down about 1 cent per share to $13.10.
The deal comes several months after HP Inc. said the HP.com online shopping store site will no longer be a separate P&L measured on sales volume on the website, but rather on the total number of transactions that it drives to partners in each of the regions.
"This is not core to the business or the direction that HP needs to go," said Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, No. 167 on the CRN 2015 Solution Provider 500. "HP Inc. is looking at driving down the cost of sales by working more closely with partners. These software assets are a much better fit for somebody else."
The deal is a strong move given the HP Inc. split from Hewlett Packard Enterprise last November, said Venero.
"HP Inc. needs to stand on its own in the stock market now that it is not tied to the behemoth that was HP," Venero said. "Any time you are dealing with a website sale in a consumer small business transaction, you have a very high cost of sale. The way you drive that cost of sale lower is by moving it off your books to someone else who holds the receivable. Moving that out to partners is going to make a big difference as to the cost of the transaction for HP versus the partner."
The HP Inc. assets include HP Exstream, HP Output Management, HP TeleForm and HP LiquidOffice. About 400 HP Inc. employees in America, Europe and Asia Pacific will join OpenText.
OpenText said the deal -- which complements its own line of CEM software including OpenText StreamServe, MediaManager, TeamSide and MediaBin -- will be immediately accretive to earnings.
The two companies also said they are "exploring opportunities" to work together to expand software solutions to customers.
In a statement, HP said the sale is consistent with its "focus on optimizing its portfolio for long-term growth and its partner-centric approach to integrating best-of-breed software into its document workflow solutions."
"The transaction strengthens the existing HP and OpenText partnership and benefits customers by combining OpenText's presence in document and content management solutions with HP's leadership in managed print services," said HP in the statement.
The deal, which must meet regulatory approval and closing conditions, is expected to close in OpenText's first fiscal quarter, ended Sept. 30.