Canada’s OpenText to acquire UK software firm Micro Focus for $6 billion

As part of the deal, OpenText Corp of Waterloo is offering 532 pence per Micro Focus share, a 99 percent premium over Thursday’s closing price.

OpenText said it will fund the cash takeover bid with $4.6 billion in new debt, $600 million from an existing credit line and cash on its balance sheet. bloomberg,

The share price of Newbury-based software firm Micro Focus rose 93 per cent to 515.6 pence in London on Friday, with the stock falling 39 per cent in the past year.

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Micro Focus sells enterprise software to thousands of organizations including Airbus SE, Hewlett Packard Enterprise Company and Kellogg Company. In addition, the firm says that its products help companies with cyber security, IT operations management, communications and messaging.

Since 2018, the firm has seen a decline in its revenue and adjusted earnings before interest, taxes, depreciation and amortization.

In recent years, OpenText has struck a number of deals to strengthen its software portfolio, including email encryption company Zix Corp and cybersecurity firm Carbonite Inc.

“Micro Focus brings meaningful revenue and operational scale to OpenText with a combined total addressable market of $170 billion. With this scale, we believe we have significant growth opportunities and upper quartile adjusted EBITDA and has the potential to create free cash flow,” Barrenchia said in a statement.

The company says it does not expect to raise any equity to raise funds for the purchase.

According to the details, OpenText is paying 2.2 times Micro Focus’s pro forma revenue for the past 12 months and the deal closes in the first quarter of 2023.

With Bloomberg inputs.

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