Canada’s OpenText to buy UK software company Micro Focus in $6 billion deal

A sign stands outside the offices of Micro Focus after they and Hewlett Packard Enterprise Co announced that Hewlett Packard Enterprise Co will separate and merge its non-core software assets with Britain’s Micro Focus International as part of a deal worth $8.8 billion, in Newbury, Britain September 8, 2016. REUTERS/Eddie Keogh

Aug 25 (Reuters) – Canadian software company OpenText (OTEX.TO) said on Thursday it would acquire Britain’s Micro Focus International Plc (MCRO.L) in a cash deal that values ​​the computer maker. enterprise software to $6 billion, including debt, to expand its enterprise information management business. OpenText will pay 532 pence ($6.30) in cash for each Micro Focus share, a 98.7% premium to Micro Focus’ Thursday closing price, giving the company a market capitalization of around $2 billion. . Micro Focus has $4.4 billion in debt on its balance sheet, according to its latest earnings report. OpenText will fund the deal by raising $4.6 billion in new debt, $1.3 billion in cash and drawing $600 million from its existing revolving credit facility. In a call with analysts, OpenText chief executive Mark Barrenechea said the company can stabilize Micro Focus’s business and accelerate its transition to the cloud. Micro Focus helps customers maintain and integrate legacy computing technologies, a business it has developed by acquiring legacy technologies such as core computing software used by banks, retailers and airlines. Waterloo-based OpenText, one of Canada’s largest software makers, said it expects cost savings of $400 million after the deal closes. The company’s U.S.-listed shares fell 4.8% in after-hours trading on Thursday. Barclays served as financial advisor to OpenText on the deal, which is expected to close in the first quarter of 2023. ($1 = 0.8448 pounds)

Reporting by Eva Mathews in Bengaluru and Krystal Hu in New York; Editing by Vinay Dwivedi and Arun Koyyur

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