October 1, 2022

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UK’s Micro Focus shares almost double after Canada’s OpenText agrees $6 billion takeover

By Eva Mathews and Krystal Hu (Reuters) -Shares of Micro Focus soared greater than 90%...

By Eva Mathews and Krystal Hu

(Reuters) -Shares of Micro Focus soared greater than 90% on Friday after Canadian software program firm OpenText agreed to purchase the enterprise software program maker in an all-cash deal valuing the British firm at $6 billion together with debt.

In a push to develop its enterprise info administration enterprise, OpenText stated on Thursday it could pay 532 pence ($6.30) in money for every Micro Focus share, a 98.7% premium over Micro Focus’s closing worth on Thursday, giving the corporate a market capitalization of about $2 billion.

Micro Focus’ shares soared to a greater than one-year excessive of 518 pence in early commerce.

The UK firm stated it thought-about the phrases of the deal to be “honest and cheap” and would suggest shareholders vote in favour of the acquisition, in keeping with the joint assertion on Thursday.

Micro Focus, primarily based in Newbury, Berkshire, has $4.4 billion debt on its steadiness sheet, in keeping with its newest earnings report.

OpenText will fund the deal by elevating $4.6 billion in new debt, $1.3 billion in money and drawing $600 million from its current revolving credit score facility.

Throughout a name with analysts, OpenText Chief Govt Mark Barrenechea stated the corporate can stabilize Micro Focus’ enterprise and speed up its cloud transition.

Micro Focus helps prospects keep and combine legacy IT know-how, a enterprise it has grown by buying legacy know-how comparable to mainframe pc software program utilized by banks, retailers and airways.

OpenText, one in every of Canada’s largest software program makers, stated it expects value financial savings of $400 million after the deal closes. The deal will probably be topic to regulatory approval.

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The corporate’s U.S-listed shares had been down 4.8% in after-hours buying and selling on Thursday.

Barclays served as monetary adviser to OpenText on the deal, which is anticipated to shut within the first quarter of 2023.

Micro Focus was suggested by Goldman Sachs and Numis. ($1 = 0.8448 kilos)

(Reporting by Eva Mathews and Yadarisa Shabong in Bengaluru and Krystal Hu in New York;Modifying by Vinay Dwivedi, Arun Koyyur and Susan Fenton)