Canada's OpenText to buy British software firm Micro Focus in $6 billion deal
Canadian software company OpenText said on Thursday it would acquire Britain's Micro Focus International Plc in an all-cash deal that values the enterprise software maker at $6 billion including debt.
Canadian software company OpenText said on Thursday it would acquire Britain's Micro Focus International Plc in an all-cash deal that values the enterprise software maker at $6 billion including debt, in a push 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 over Micro Focus's closing price on Thursday, giving the company a market capitalization of about $2 billion.Micro Focus has $4.4 billion 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.
During a call with analysts, OpenText chief executive Mark Barrenechea said the company can stabilize Micro Focus' business and accelerate its cloud transition.Micro Focus helps customers maintain and integrate legacy IT technology, a business it has grown by acquiring legacy technology such as mainframe computer 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 were down 4.8% in after-hours trading on Thursday.
Barclays served as financial adviser to OpenText on the deal, which is expected to close in the first quarter of 2023.($1 = 0.8448 pounds)
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