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Micro Focus International PLC on Friday said it agreed with Canada's OpenText Corp on the terms of a recommended cash acquisition that values the UK software company, including its debt, at around £5.1 billion.
Under the terms of the acquisition, each of Micro Focus' shareholders will receive 532 pence per share. This represents a 98% premium to Micro Focus' closing share price of 268 pence on Wednesday.
It values the entire issued and to be issued share capital of the Newbury, Berkshire-based enterprise software firm at £1.8 billion, on a fully diluted basis.
OpenText is a Ontario, Canada-headquartered software firm. It is one of the biggest software companies in the country with a market capitalisation of $10.06 billion.
OpenText explained that the acquisition represents a highly attractive opportunity to it.
‘Micro Focus's marquee customer base will strengthen and deepen OpenText's presence in the Global 10,000 and expand OpenText's geographic footprint in North America, Europe, the Middle East and Africa, Asia-Pacific and Japan which is highly complementary to OpenText's geographical presence today. OpenText, with Micro Focus, will possess one of the largest global customer bases and broadest solution suites in enterprise software, addressing a market opportunity of approximately $170 billion,’ the firm stated.
The enlarged company is expected to generate $6.2 billion in annualised revenue and roughly $2.2 billion in annualised adjusted earnings before interest, tax, depreciation, and amortisation.
Micro Focus said its directors intend to recommend unanimously that Micro Focus shareholders vote in favour of the takeover at a court meeting and the resolutions to be proposed at a general meeting. The transaction is expected to be completed during the first quarter of 2023.
Micro Focus shares closed at 267.80 pence per share on Thursday in London. Shares in OpenText closed at $37.27 in New York on Thursday and were down 4.8% in after-hours trade.
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