11:30 AM EDT, 09/09/2024 (MT Newswires) -- Progress Software ( PRGS ) agreed to buy software-as-a-service document collaboration business ShareFile from Cloud Software Group for $875 million.

The acquisition will be funded with a combination of cash and Progress' existing credit facility. The deal is expected to close within Progress' current fiscal year ending Nov. 30, pending regulatory approvals. Shares of Progress were down 2.2% in Monday trade.

ShareFile would add more than $240 million in annual revenue and 86,000 customers to Progress. The proposed acquisition aligns with Progress' total growth strategy that seeks to double the company's size every five years.

The SaaS tool will fit strategically in Progress' digital experience portfolio, helping organizations "deliver more effective client and team collaboration while simplifying the secure sharing of documents and other content," Progress Chief Executive Yogesh Gupta said in a statement.

"Businesses today need to enhance their effectiveness in serving customers, while continuously streamlining their operations to drive efficiency, security and compliance," he said.

Cloud Software Group Chief Executive Thomas Krause said ShareFile will be better positioned with Progress' "extensive product portfolio, expertise and its expansive user community."

Progress expects fiscal third-quarter revenue and adjusted earnings per share to be within or above the high-end of its guidance outlined in June. At the time, the company said it was forecasting third-quarter revenue in the $174 million to $178 million range and non-GAAP EPS between $1.11 and $1.15. Seven analysts surveyed by Capital IQ are modeling for revenue of $175.9 million and normalized EPS of $1.14. Progress is scheduled to report results for the third quarter on Sept. 24.

Progress's quarterly dividend would be suspended once the ShareFile acquisition closes, with plans to redirect capital toward paying down debt, which would increase liquidity for future mergers and acquisitions. The company would also use funds for stock buybacks.

Price: 56.29, Change: -1.36, Percent Change: -2.36