OpenText has agreed to sell its eDOCS legal document management system to NetDocuments for US$163 million in cash, the company's first major divestiture following its CEO's departure in August.

The on-premise solution generated approximately US$30 million in annual revenue in OpenText's fiscal year ending June 30, 2025. OpenText will use proceeds to reduce debt accumulated under previous leadership.

The transaction includes software, customer contracts, associated services and employees. It is expected to close by early 2026, subject to regulatory approvals and closing conditions.

"This divestiture further enables our continued focus on growing our core business," said Tom Jenkins, OpenText executive chairman and chief strategy officer. The company claims it is focused on what it describes as "secure information management for AI."

The company has historically grown through acquisitions, creating what analysts describe as a "sprawling portfolio" of products requiring rationalisation. The debt reduction strategy suggests financial pressure to streamline operations.

James McGourlay, OpenText interim CEO, said NetDocuments would "ensure a seamless transition" for eDOCS users.

OpenText acquired eDOCS nearly two decades ago as part of its 2006 purchase of Hummingbird.

Industry analyst Alan Pelz-Sharpe of Deep Analysis said the sale is likely the first of multiple portfolio rationalisations at OpenText.

"I'm pretty confident in saying that this is just the first of many such divestitures," Pelz-Sharpe wrote. "OpenText has an extensive and sprawling portfolio of products that are no longer core to its mission."

Pelz-Sharpe described the US$163 million price as fair for both parties, giving NetDocuments access to eDOCS's customer base and employees. He called the portfolio clear-out "long overdue."

The analyst noted that OpenText's new leadership would likely examine the company's "vast and sprawling portfolio" following the August CEO departure.