MA-ROCKET-SOFTWARE

Rocket Software, Inc. (“Rocket Software”), a global technology leader driving modernization for the world’s largest companies, today announced it has signed a definitive agreement to acquire the Application Modernization and Connectivity business (AMC) of OpenText (NASDAQ: OTEX), (TSX: OTEX), which was formerly part of Micro Focus. The total purchase price is $2.275B.

For decades, Rocket Software has been the partner solving complex IT challenges for the largest and most innovative organizations, across infrastructure, data, and applications. Rocket Software’s hybrid cloud strategy empowers customers to optimize their application portfolio wherever they are in their modernization journey, enabling them to bridge the gap to modern use cases without disrupting their mission-critical operations. This approach allows organizations to benefit from the mainframe's security and dependability while also taking advantage of powerful analytics tools in the cloud.

AMC has been a leader in application modernization for many years, providing industry-leading tools including COBOL and host connectivity. These tools enable organizations to leverage their core applications and offer flexibility for modernization, allowing them to run applications wherever they choose. With AMC, Rocket Software will have a more diverse modernization portfolio that aligns with customer demands, whether on-premises or through a hybrid cloud strategy.

Rocket Software's acquisition of AMC achieves five key strategic objectives, including:

• Meeting organizations at any stage of their modernization journeys with a comprehensive product portfolio addressing all use cases, spanning from mainframe to hybrid workloads.
• Enabling customers to derive value from their decades of investment in the core applications that run their business while also innovating and taking full advantage of new applications and technologies.
• Solidifying Rocket Software as a leader in hybrid cloud, deepening current customer relationships and ensuring sustainable growth in the legacy enterprise IT market. The company is positioned not only to address immediate customer needs but also to guide customers through their modernization journey over time.
• Extending and complementing Rocket Software’s industry-leading R&D expertise, fostering continuous innovation through the application of emerging technologies like generative AI.
• Further strengthening Rocket Software's position as the partner of choice to meet industry and customer needs and deliver superior customer success.

“We are proud to be the preferred partner dedicated to meeting our customers at any point in their modernization journeys and minimizing unnecessary risk to their business operations,” said Milan Shetti, Rocket Software President and CEO. “For the many enterprise organizations who are built on the mainframe and ready to unlock opportunity using hybrid cloud, reality calls for a continuum with solutions and expertise that span both worlds. Welcoming the AMC business and its talented team to Rocket Software marks an extraordinary moment for the company, the market, and the thousands of organizations who share in our vision of making the best-of-both-worlds a reality.”

By combining Rocket Software’s industry-leading customer service with more resources to innovate, the company will be uniquely positioned in the market to not only meet customers’ immediate needs but also to help them transform over time. These deep customer relationships will strengthen retention, broaden cross-sell opportunities, and drive sustainable growth for the business.

Rocket Software intends to fund the acquisition with a combination of new cash equity from its existing shareholders, committed debt financing, and cash from its balance sheet. The debt financing is expected to include incremental senior secured term loans and new senior secured notes. Inclusive of expected synergies, the company expects the acquisition will be leverage neutral on a total leverage basis, but leveraging on a secured basis.

The deal is expected to close in Q2 2024 ending June 30, 2024, subject to receipt of applicable regulatory approvals and other customary closing conditions.

RBC Capital Markets, LLC, Barclays Capital Inc., Deutsche Bank Securities Inc., and UBS Securities LLC are serving as financial advisors to Rocket Software. Ernst & Young LLP served as Accounting Advisor to Rocket Software. Kirkland & Ellis LLP served as Legal Advisor to Rocket Software. Debt financing for the transaction will be provided by RBC Capital Markets, Barclays Capital, Deutsche Bank Securities, UBS Securities, Citigroup Global Markets, HSBC Securities, Mizuho Securities, and SMBC Nikko Securities.

About Rocket Software

Rocket Software partners with the largest enterprises, in all industries, to solve their most complex IT challenges, across infrastructure, data, and applications — with solutions that simplify, not disrupt their modernization journey. Trusted by over 10,000 customers, Rocket Software helps enterprises modernize in place with a hybrid cloud strategy, so they don’t need to re-platform or build from the ground up. The company’s 2,300 global employees work with customers to accelerate and optimize their modernization journey while meeting evolving market needs. Rocket Software is a privately held U.S. corporation headquartered in the Boston area with centers of excellence strategically located throughout North America, Europe, Asia and Australia. Rocket Software is a portfolio company of Bain Capital Private Equity. Follow Rocket Software on LinkedIn and Twitter or visit www.RocketSoftware.com.

Cautionary Information Regarding Forward-Looking Statements

Some of the statements contained in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, including, but not limited to, statements about the overall performance of the AMC business and the expected synergies from the acquisition and statements about the expected financing and closing date of the acquisition, including obtention of regulatory approvals and satisfaction of other customary closing conditions. These forward-looking statements are generally identified by the use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and, in each case, their negative or other various or comparable terminology. These forward-looking statements reflect our views with respect to future events as of the date of this press release and are based on our current expectations, estimates, forecasts, projections, assumptions, beliefs and information. Although management believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. All such forward-looking statements are subject to risks and uncertainties, many of which are outside of our control, and could cause future events or results to be materially different from those stated or implied in this press release. Such factors and risks include, but are not limited to, risks related to the receipt of regulatory approvals and satisfaction of the other closing conditions to close the acquisition; our ability to successfully obtain the expected financing for the acquisition; our ability to successfully integrate the AMC business and realize the expected synergies; and certain other risks. It is not possible to predict or identify all such risks. We expressly disclaim any obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.

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