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Digi to acquire Opengear
Posted on Friday, 08 November 2019 15:42
Digi International is buying US-based computer network technology company Opengear for USD 155.00 million in cash.
The consideration includes an upfront sum of USD 140.00 million and an earnout of up to USD 15.00 million, dependent on revenue-related targets being achieved during 2020.
Based on the purchase price, the acquisition represents a multiple of around 8.0x the target’s earnings, before interest, taxes, depreciation and amortisation (EBITDA) for the nine months ended 30th September 2019.
Digi plans to fund the deal through a combination of cash on hand and new debt financing.
The transaction, which remains subject to antitrust regulatory clearance and customary conditions, is due to close by the end of 2019.
New Jersey-headquartered Opengear provides secure information technology products and software to 75 Fortune 100 clients and other customers.
The group’s offerings include the Opengear CM7100, a console server which simplifies the process of out-of-band management for networks and power infrastructures in data centres and remote sites.
Formed in 2004, the target also provides network resilience and automation services, among other activities.
Opengear has sites across the US, as well as a research and development centre in Brisbane, Australia.
The target is expected to retain its existing locations and offices following closing.
In the nine months to 30th September, Opengear posted EBITDA of USD 13.70 million on revenue of USD 41.90 million.
Ron Konezy, chief executive of Digi, said: “Joining forces with Opengear gives customers an expansive, high-value, technology portfolio that is hardware enabled and software defined.”
The transaction will also extend the buyer’s market reach and immediately increase its earnings.
Furthermore, the acquisition is expected to generate savings and improve Digi’s gross and EBITDA margins.
There have been 3,740 deals targeting software publishers announced worldwide since the beginning of 2019, according to Zephyr, the M&A database published by Bureau van Dijk.
Salesforce.com agreeing to purchase US-based Tableau Software for USD 15.70 billion was the most valuable of these in the year to date.
© Zephus Ltd