Software corporation OpenText has agreed to acquire Micro Focus for around $6bn, in the aim of bolstering its digital transformation services
The acquisition announced today was made through OpenText UK Holding Limited (Bidco), and is set to make OpenText one of the world’s largest software and cloud providers.
With this deal, Canadian company OpenText — which also owns cloud backup provider Carbonite, and cyber security company Webroot among other subsidiaries — expands its information management market opportunity to $170bn.
UK-based Micro Focus, which saw its shares double in the wake of the agreement, provides application delivery and modernisation, IT transformation and cyber resilience for a global customer base that includes members of the Fortune Global 500.
The company will be able to leverage the OpenText Business System to create stronger operations and cash flows, while its customers will gain access to the OpenText Private and Public Clouds.
According to OpenText, the branding and cultural values held by Micro Focus strongly align with its day-to-day operations.
“We are pleased to announce our firm intention to acquire Micro Focus, and I look forward to welcoming Micro Focus customers, partners and employees to OpenText,” said Mark J. Barrenechea, CEO and CTO of OpenText.
“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.
“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.
“OpenText does not contemplate raising any equity to fund the acquisition. We are committed to providing investors with enhanced visibility into our high-value business areas, delivering a net leverage ratio of below 3x over eight quarters and continuing our dividend program, and we expect to have Micro Focus on our operating model within six quarters of closing the transaction.”
Contributing to UK tech
International investments such as today’s acquisition have played a key role in maintaining innovation in the UK.
According to Tech Nation CEO Gerard Grech, OpenText purchasing Micro Focus will end up forming “part of a larger journey whereby UK tech becomes a growing, circular innovator and job creator”, looking beyond the national sector’s recently met $1bn value benchmark.
He commented: “I predict that the ripple effect will be more capital invested in the next generation of UK-based tech startups and scale-ups by new exited angel investors. This shows what a global powerhouse UK tech has become in a short period of time. This is why it’s important we continue to nurture a strong community and pipeline of companies to list on the London Stock Exchange where possible.
“73 per cent of investment into UK tech comes from overseas. With Sterling 10 per cent+ cheaper against the US dollar than 18 months ago, UK companies represent a particularly attractive proposition for international investors right now, especially after the public market tech sell-off.
“As the leading European tech country and world-leader in Fintech and cyber, the UK continues to be a magnet for investors and a natural destination and home for US investors.”
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