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Jul 11, 2019

OpenText observes 'moment of silence' for competitor Red Hat after IBM deal

OpenText CEO throws shade at IBM-Red Hat's US$34B deal


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OpenText Corp.’s chief executive is turning up the heat on the tech company’s cloud-computing competition.

Speaking to BNN Bloomberg from the company’s Enterprise World 2019 conference in Toronto, OpenText CEO Mark Barrenechea pronounced competing software company Red Hat Inc. dead on the heels of its US$34 billion acquisition by International Business Machines Corp.

“We kind of had a moment of silence here today for Red Hat, because they’re gone inside of IBM,” Barrenechea said, laughing.

He added that Red Hat – whose IBM deal closed on Tuesday – is undergoing a personality crisis.

“Red Hat’s very expensive. They’re going to have to work hard to make it work,” he said. “I thought they were an AI company versus an open source company, but ultimately, the proof will be in the results.”

Waterloo, Ont.-based OpenText is no stranger to tie-ups as well as mergers and acquisitions, having just expanded a partnership of its own with Google’s cloud division earlier this week. That pact sent the company’s TSX-listed shares (OTEX.TO) up 2.5 per cent Tuesday, its biggest intraday gain since May 8.

The company also purchased U.S. legal tech company Catalyst Repository Systems Inc. in January.

“We’re going to continue to acquire,” Barrenechea said. “Acquisitions will continue to be our lead growth driver, and we look for acquisitions that can fill that portfolio out and make it functionally complete.”

As for IBM’s M&A strategy, Barrenechea remained skeptical, offering his company as an upgrade to some of the tech giants current customers.

“I truly feel IBM’s distracted, and while they’re distracted, that’s good for OpenText,” he said.

“We’re going to look at (IBM) FileNet and Sterling Commerce customers who need the next generation. We’re going to be offering real cloud functionality with Google, so those customers can get on to new business models.”