OpenText Sells eDOCS Unit to NetDocuments for $163 Million

OpenText has agreed to sell its eDOCS unit to Utah-based NetDocuments for $163 million USD (approximately $227.3 million CAD) in cash. The Kitchener-Waterloo-based information management company initiated the process of divesting its “non-core assets” in August 2023, aiming to refocus on its primary business centered around artificial intelligence solutions.

The eDOCS division, which specializes in document management for legal professionals, generated around $30 million in revenue for OpenText during its latest fiscal year. Under the terms of the agreement, the eDOCS software, along with existing customer contracts, services, and employees, will be transferred to NetDocuments. OpenText has yet to disclose the number of employees affected by the sale.

Strategic Shift for OpenText

The transaction is anticipated to close by early 2026. OpenText plans to utilize the proceeds from this sale to reduce its existing debt. Tom Jenkins, executive chairman and chief strategy officer at OpenText, stated, “This divestiture further enables our continued focus on growing our core business centered on secure information management for AI.” He emphasized that the sale aligns with the company’s capital allocation framework and reinforces its commitment to areas that will foster future revenue growth.

Jenkins also indicated that OpenText will continue to evaluate and streamline its portfolio by identifying additional non-core assets for potential divestment. This ongoing review is part of a broader “business optimization plan” that aims to stabilize and control costs within the company.

Leadership Changes and Future Directions

The divestiture follows significant leadership changes at OpenText, including the recent replacement of CEO Mark Barrenechea, who had held the position for nearly 14 years. Barrenechea’s departure was part of a strategic shift after the company reported stagnant revenue growth. Executive vice-president of international sales, James McGourlay, has been appointed as interim CEO while Jenkins leads the search for a permanent replacement.

Additionally, the company has seen the exit of CFO Chadwick Westlake, who has taken on a new role as president and CEO of Equitable Bank. OpenText has since appointed Steve Rai, former CFO of BlackBerry, to fill the CFO position.

Founded in 1991, OpenText has evolved its offerings to include a range of cloud-based information management solutions, competing with major players such as IBM, ABBYY, and Hyland. The company has made significant strides in integrating cloud and AI technologies, further enhancing its cybersecurity and AI capabilities.