Open Text to buy Captaris

Content management vendor Open Text plans to buy document and data capture software maker Captaris for roughly US$131 million, the company announced Thursday. The deal is expected to close by the end of the year.

Captaris, based in Bellevue, Washington, makes software for managing the digitization of paper-based documents. Its technology will work alongside Open Text's invoice management products for SAP and Oracle. The company also makes software based on Microsoft's .NET platform.

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The pending sale to Open Text is not unexpected, as Captaris announced in March that it was seeking "strategic alternatives to further enhance shareholder value."

Meanwhile, Open Text has become a potent player in the content management arena, reporting about $725 million in revenue during fiscal 2008 and claiming roughly 46,000 customers.

But with growth come potential pitfalls, according to CMS Watch analyst Alan Pelz-Sharpe.

The analyst said in a blog post Thursday that the acquisition "is a potentially complex one" for Open Text and by extension, customers.

Much of Captaris' revenue is derived from its RightFax product for distributing faxes, Pelz-Sharpe wrote: "It's a well-respected product, but one that Open Text will now have to maintain and develop, along with supporting a very large and fragmented customer base."

"Add to this that Captaris also has a document management and workflow product suite (and related customers) that will somehow have to be digested, integrated, and supported, and a smallish deal of an embattled company starts to look less glittering," he continued. "As a potential customer, it will pay to wait and observe here."

Open Text might also follow up this purchase by scooping up a larger company like Vignette. Over time, Open Text could become "more of a holding company than an ECM firm," he suggested.

The IDG News Service is a Network World affiliate.