Canada’s Open Text (OTEX) is buying British software firm Micro Focus International (MCRO)
for $6 billion U.S.
Waterloo, Ontario-based Open Text has offered 532 British pounds per Micro Focus share,
representing a 99% premium to that stock’s closing price on August 24.
Open Text said it will fund the takeover with $4.6 billion U.S. in debt, $600 million U.S. from an
existing credit line, and cash on hand.
Micro Focus is headquartered in Newbury, England and sells enterprise software to thousands
of organizations, including Airbus (AIR), Hewlett Packard (HPE), and Kellogg Co (K). Its
products help companies with cybersecurity, information technology, and online messaging.
However, Micro Focus has reported declining earnings every year since 2018, and analysts had
speculated it was a takeover target.
The acquisition of Micro Focus builds on Open Text’s stated strategy to grow through
acquisitions.
Open Text has made a series of deals to bolster its software portfolio in recent years, including
purchasing email encryption company Zix Corp. and cybersecurity firm Carbonite.
The Micro Focus acquisition is a big one for Open Text, representing nearly half of its enterprise
value of $12.8 billion U.S. Open Text expects the deal to close in the first quarter of next year.
Open Text stock is down 19% this year at $48.14 per share. Micro Focus stock jumped 93% on
news of the acquisition offer from Open Text and is now up 21% on the year at 518.00 British
pounds.
