Rocket Software's $2.275B AMC Acquisition Reshapes Enterprise Modernization Landscape

Rocket Software has secured a transformational deal, signing a definitive agreement to acquire OpenText’s Application Modernization and Connectivity business in an all-cash transaction valued at $2.275 billion. This strategic move positions the company as a comprehensive solution provider for enterprises navigating complex digital transformation pathways, particularly those with legacy mainframe infrastructure seeking hybrid cloud capabilities.

Strategic Rationale: Bridging Legacy and Modern Infrastructure

The acquisition represents a significant expansion of Rocket Software’s modernization portfolio. The company, which has served over 10,000 enterprise customers across infrastructure, data, and applications, identifies a critical market gap: organizations built on mainframe foundations require sophisticated tools to extend their core applications while simultaneously embracing cloud-native innovations. The AMC business, historically a standout provider of COBOL and host connectivity solutions, directly addresses this need.

By integrating AMC’s industry-leading tools and capabilities, Rocket Software enhances its hybrid cloud strategy. This approach allows enterprises to preserve decades of investment in mission-critical mainframe systems while simultaneously leveraging modern cloud analytics and emerging technologies. Rather than forcing costly re-platforming initiatives, the combined entity empowers customers to optimize their application portfolios progressively.

Five Core Strategic Objectives

Milan Shetti, President and CEO of Rocket Software, outlined the acquisition’s strategic foundation. The deal achieves multiple objectives: first, it creates a comprehensive portfolio addressing modernization across all stages, from legacy mainframe workloads to contemporary hybrid deployments. Second, it enables organizations to extract value from existing enterprise applications while innovating with new technologies. Third, it reinforces Rocket Software’s market position as the hybrid cloud partner of choice for legacy enterprise IT segments.

Additionally, the transaction strengthens research and development capabilities, incorporating emerging technologies such as generative AI into the product roadmap. Finally, the acquisition consolidates Rocket Software’s competitive positioning by deepening customer relationships and creating sustainable growth opportunities across the enterprise IT market.

Financing and Deal Timeline

Rocket Software intends to fund the $2.275 billion acquisition through a combination of equity contributions from existing shareholders, committed debt financing, and cash reserves. The debt component includes incremental senior secured term loans and new senior secured notes, with financing provided by a consortium including RBC Capital Markets, Barclays Capital, Deutsche Bank Securities, UBS Securities, and additional banking partners.

Management expects the transaction to be leverage neutral on a total leverage basis while improving the secured leverage position, inclusive of anticipated synergies. The deal is projected to close in Q2 2024 (ending June 30, 2024), contingent on regulatory approvals and customary closing conditions.

Market Implications and Integration Strategy

The combined entity will leverage Rocket Software’s established customer service excellence and innovation capacity alongside AMC’s technical expertise. This consolidation is expected to strengthen customer retention, broaden cross-selling opportunities, and generate sustainable revenue growth. With 2,300 global employees and strategic centers across North America, Europe, Asia, and Australia, the company is positioned to provide integrated support for enterprise modernization journeys.

RBC Capital Markets, Barclays Capital, Deutsche Bank Securities, and UBS Securities served as financial advisors to Rocket Software, with Ernst & Young LLP providing accounting advisory services and Kirkland & Ellis LLP handling legal representation.