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Waltham software firm expanding with $2 billion deal

Rocket Software chief executive Milan Shetti (right), who took over from Andy Youniss (left) in 2018, is buying the applications business of OpenText.Rocket Software

Rocket Software in Waltham continued its recent acquisition binge, agreeing to pay $2.3 billion for part of the applications business of Canadian software firm OpenText.

While many corporate IT departments have moved to cloud computing, Rocket remains focused on catering to big banks, health care systems, and others still relying on older-style mainframe computers, the hulking behemoths that have survived for decades despite constant predictions of their demise. OpenText’s unit specializes in COBOL, the 1950s programming language still used for some mainframe applications.

Founded in 1990, Rocket has been growing through acquisitions since Bain Capital took control in 2018. Earlier this year, Rocket missed out on a bid to buy its German rival Software AG for more than $2 billion, but it has rolled up a handful of other mainframe-related firms including Key Resources and B.O.S. this year.

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Rocket chief executive Milan Shetti said the OpenText deal would help with customers who are using mainframe systems while also adding some cloud applications, relying on a so-called hybrid setup. “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,” Shetti said in a statement.

OpenText, based in Waterloo, Ontario, is dumping its mainframe-related applications business as it seeks to concentrate on artificial intelligence apps and cloud-based computing. The unit being divested is growing more slowly than other parts of OpenText but is highly profitable. The applications business brought in revenue of about $500 million and adjusted cash flow of $275 million for the year ended June 30, OpenText said.

Rocket’s latest acquisition comes even as the company may be up for sale. In October, Bloomberg reported that Bain was looking to sell its stake in Rocket in a deal that could value the software firm at more than $5 billion. Rocket declined to comment.

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Bain also declined to comment on the rumor. “We’re proud of Rocket Software’s leading market position and look forward to supporting its continued growth journey,” Max de Groen, a partner at Bain Capital Private Equity and a member of Rocket’s board, said in a statement about the acquisition.


Aaron Pressman can be reached at aaron.pressman@globe.com. Follow him @ampressman.