OpenText Valuation (OTEX)| 09.20.16Ulysses Dane Hickey

Overview

Open Text Corporation provides intranet, extranet and corporate portal solutions to organizations located throughout the world. The Company’s flagship product, Livelink is an off the shelf, enterprise scalable, collaborative application for companies that want to leverage their information and resources through intranets

“Unlocking the value of enterprise information requires finding , analyzing and making

sense of large volumes of information” – Mark

Barrenechea, CEO OpenText

• Diversified geographic revenue stream

• 80% Institutional Ownership

Canadian Dollar: Quarterly Actual/ Forecasts

Citigroup (Green) Barclays (Pink)

Exchange Rate Risk: 2016- one cent change in Canadian Dollar to US would result in a change of $0.3 Million in mark to market on existing forward exchange forward contracts Compared with 2015 of $0.8 million

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Strategic Rationale

Strategic Rationale• Expands OpenText’s EIM products

and services portfolio.• Drives cross-sell of OpenText EIM

portfolio into Documentum customers.

• Expands geographic coverage, increasing our exposure into emerging markets.

Optimize financial performance• 2020 aspiration of 34% to 38%

adjusted operating margin (AOM) remains unchanged.

• On operating model within 12 months of closing.

• 900 million in highly recurring revenues

Transaction Overview

Acquisition Details• Purchase price of US$1.62 billion is

approximately 2.7 times ECD FY’15 revenue of $599M1

• Targeting to be immediately accretive to earnings, onboard to the OpenText operating model within the first 12 months.

• Expect the transaction to close within 90 to 120 days, subject to regulatory approvals and customary closing conditions.

Financing• $1.0 billion debt commitment

provided by Barclays in support of the acquisition.

• OpenText’s objective is to maintain a conservative capital structure, preserving its current credit ratings.

• The permanent financing may include elements of cash on hand, new borrowings under credit facilities, and newly issued equity.

Open Text Corp acquired GXS Group Inc consulting services for USD 1165.00 CASH

HP sold Customer Communications Management Open Text Corp for USD 315.00M CASH

Dell announced the sale of its EC Division to Open Text Corp for USD 1,620.00MCASH

SPX Comparison Over 1 Year

SPX Comparison Over 3 Years

Key Points

OTEX 2013 2014 2015 2016Return on Assets 5.83% 6.66% 5.68% 5.98%

Operating Margin 14.50% 18.50% 18.83% 20.20%

Net Income Margin 10.89% 13.43% 12.65% 15.59%

Revenue Growth 12.91% 19.17% 13.99% -1.50%

"Fiscal 2016 was a pivotal year for OpenText, in constant currency, we grew revenues 3% and created a more efficient business and expanded our adjusted operating margin by 240 bps. More importantly, we believe we have created the foundation for Fiscal 2017 to be a double-digit growth year led by M&A,“ - CEO Mark J. Barrenchea

Strengths

Strong consistent revenue growth

Net income increasing year after year

Increasing operating margin

Heaving investing and acquisitions

Increasing cash flow from operations and net cash

flow

Recommendation

• Strong Buy: 203 Shares at a price of $13,278.23

• Best Case: 1 year price target DFC $99.53-Perpetuity Growth $89.29

• Worst Case : 1 year price target $73.53 with 14% upside