Micro Focus Group Plc, the English-American Cobol specialist, has signed on the dotted line to acquire applications enablement software and services outfit Intersolv Inc. Micro focus claims the deal will create a major new enterprise software vendor that can adequately cover the growing need of corporations to accelerate the development and integration of applications in distributed computing environments. The deal is being structured as a tax-free, all-stock transaction. For US accounting purposes, the deal will be accounted for as a pooling of interests. Under the terms of the agreement, each common share of Intersolv stock will be exchanged for 0.55 Micro Focus American depositary shares, valuing Intersolv at about $534m based on the closing price per Micro Focus ADS on the Nasdaq National Market of $39.75 on Tuesday. The combined company will boast revenues for the preceding 12 months of just over $375m, a staff of more than 1,900, sales and distribution capability in over 40 countries, and a balance sheet with over $125m in cash. The transaction, which is expected to close in about 90 days, has been approved by the boards of both companies and is subject to the approval of their shareholders and clearance by UK and US regulatory authorities. Micro Focus will issue roughly 14.4 million new ADSs, representing approximately 72 million new Micro Focus ordinary shares, for all the outstanding common stock and share equivalents of Intersolv, which will then represent approximately 46% of the combined entity’s share capital on a fully diluted basis. J. Michael Gullard, chairman of Micro Focus, and Martin Waters, its chief executive will retain those positions in the combined company, with the rest of the management team will be drawn from the executives from both. The company will be headquartered in Mountain View, California and its ordinary shares will be listed on the London Stock Exchange, with the ADSs listed on Nasdaq. The new entity will aim to provide all the elements for the development of next-generation enterprise applications. The applications will be component-based, multi- platform, and implemented in open languages such as Java and COBOL, preserving the ability to reuse existing applications as well. The company will concentrate on its core competencies of application development environments, automated software quality, data connectivity and application transformation. The combination will also allow it to build critical mass in services capability, with both its own staff and over 500 technology and marketing partnerships.
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