TORONTO – Ontario’s Liberal government announced Friday it would provide a $120-million grant to Waterloo-based Open Text Corp. (TSX:OTC), Canada’s largest software company.
Premier Kathleen Wynne said the grant will help create as many as 1,200 “well paying” jobs as Open Text invests $2 billion to expand its operations in Toronto, Peterborough, Kingston, Ottawa and Waterloo over the next seven years.
The grant and investment by Open Text will bolster Ontario’s position as North America’s second biggest centre for information and communications technology, behind California and ahead of Texas, added Wynne.
“This investment is a terrific example of how government can partner with business to help create jobs and grow the economy,” she said.
Open Text, which started as a technology spin-off from the University of Waterloo in 1991 with four employees, now has more than 8,000 workers worldwide. The company reported Thursday that net earnings for the three months ended March 31 soared to $45.8 million, or 33 cents per share, as revenue rose to $442.8 million.
Over the past seven years, annual revenues at Open Text have grown nearly 130 per cent to $1.36 billion. Shares of the company have strengthened as well, rising more than 160 per cent over the past five years.
“We are an Ontario-grown global company and we chose to invest here because of the highly educated workforce, our strong university partnerships in R-&-D, as well as the province’s robust and innovative start-up communities,” said Open Text president and CEO Mark Barrenechea.
Progressive Conservative Leader Tim Hudak said he would stop giving money to corporations and instead would cut taxes for all businesses, not just big companies with well connected lobbyists.
“So let’s replace the handout business, the $2 billion in corporate welfare, and use that money to give lower and fair taxes for all businesses to succeed,” Hudak said at a Toronto factory.
“Small, medium-sized businesses don’t get the handouts, they get stuck with the bill.”
But Wynne rejected Hudak’s criticism and said it is the government’s duty to team up with businesses like Open Text to ensure jobs are created and the economy keeps growing.
“We are proud to support its continued growth here in the province,” she said.
Last December, Wynne announced Ontario was giving another IT giant, Cisco Canada, $220 million to help create up to 1,700 new jobs in the province.
Economic Development Minister Eric Hoskins said companies like Cisco and Open Text are “courted daily by presidents and senators” who want investments and jobs in their communities, so he “aggressively” pursued Open Text when he heard they were looking to expand.
“Unlike the Conservatives, who would have us stand aside when these opportunities come up, we believe that we do need to compete,” Hoskins said in an interview.
“When you’ve got a world class firm such as Open Text making a significant, $2 billion investment – where they can make that in any one of the 33 countries where they have a presence – we wanted them to make it here in Ontario.”
Ontario gets more than 90 per cent of its foreign investment without using taxpayers’ money as an incentive, but the Liberal government is looking to partner with companies to attract more investment capital, especially with high-growth firms like Open Text, added Hoskins.
“We feel that it’s important in terms of not just job growth, but also strengthening and anchoring even further that great high-tech cluster that we’ve got in the province,” he said. “This was an investment worth making.”
Open Text sells software and data management technology used by companies to protect their electronic documents. It has been rapidly expanding over the past few years with the acquisition of several companies involved in e-learning.
“We’re equally optimistic about the future that we’ll continue to grow,” Barrenechea said in an interview.
“We’re putting our multi-year plans in place right now and making choices where we want to continue to establish ourselves. It’s important to have a public-private partnership to help make those choices.”