Canadian software company OpenText said it would acquire Britain’s Micro Focus International Plc in an all-cash deal that values the enterprise software maker at $6 billion including debt, in a push to expand its enterprise information management business.
OpenText will pay 532 pence ($6.30) in cash for each Micro Focus share, a 98.7% premium over Micro Focus’s closing price on Thursday, giving the company a market capitalization of about $2 billion.
Micro Focus has $4.4 billion debt on its balance sheet, according to its latest earnings report.
OpenText will fund the deal by raising $4.6 billion in new debt, $1.3 billion in cash, and drawing $600 million from its existing revolving credit facility.
During a call with analysts, OpenText chief executive Mark Barrenechea said the company can stabilize Micro Focus’ business and accelerate its cloud transition.
Micro Focus helps customers maintain and integrate legacy IT technology, a business it has grown by acquiring legacy technology such as mainframe computer software used by banks, retailers and airlines.
Waterloo-based OpenText, one of Canada’s largest software makers, said it expects cost savings of $400 million after the deal closes.
The company’s U.S-listed shares were down 4.8% in after-hours trading on Thursday. Barclays served as financial adviser to OpenText on the deal, which is expected to close in the first quarter of 2023.
Source: Reuters.com