British enterprise IT giant Micro Focus saw its share price almost double on Friday morning after Canadian cloud software company OpenText announced it has agreed a $6bn takeover of the business.
In a deal announced overnight, OpenText said it has agreed to pay £5.32, or $6.30, per share to acquire the business. This represents a 98.7% premium on Micro Focus’s closing price on Thursday, and puts its market cap at $2bn.
The deal will also see OpenText take Micro Focus’s substantial debt, which was $4.4bn at the time of its last earnings report.
“Upon completion of the acquisition, OpenText will be one of the world’s largest software and cloud businesses with a tremendous marquee customer base, global scale and comprehensive go-to-market,” said OpenText CEO and CTO Mark J. Barrenechea.
“Customers of OpenText and Micro Focus will benefit from a partner that can even more effectively help them accelerate their digital transformation efforts by unlocking the full value of their information assets and core systems.”
What is Micro Focus?
Founded in 1976, Micro Focus helps businesses with digital transformation projects as well as assisting them in maintaining and integrating legacy IT technology. It has managed to grow this business by buying up legacy technology including mainframes used by banks, retailers and airlines.
The company also has an active cybersecurity business and boasts 18,000 customers and two million active users of its services around the world. It reported revenue of $2.9bn in 2021, slightly down on the previous year.
OpenText, which also provides a range of cloud-based IT services, says the acquisition will help Micro Focus with its own transformation to a more cloud-focused business model.
The deal is expected to close in the first quarter of next year, and OpenText expects to be able to make costs savings of $400m once it is completed.
News of Micro Focus being acquired comes 24 hours after it was revealed another of the London Stock Exchange’s biggest tech companies, Aveva, could also fall into foreign hands, with French company Schneider Electric mulling a move to acquire the business. It already owns 60% of Aveva.
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