The definitive acquisition of Micro Focus by OpenText is at a cost of $6 Billion
In a major development, Canada-headquartered OpenText, one of world’s leading enterprise information management products & solutions provider, has struck a definitive agreement with UK-based Micro Focus, another top-notch player active in the fields of application delivery management, big data analytics as well as cyber security, for acquiring it (Micro Focus) at an estimated cost of $6 Billion.
“We’re pleased to announce our firm intention to acquire Micro Focus, and I look forward to welcoming Micro Focus customers, partners and employees to OpenText,” says Mark J. Barrenechea, CEO & CTO, 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,” elaborates Barrenechea.
“Micro Focus brings meaningful revenue and operating scale to OpenText, with a combined total addressable market (TAM) of $170 Billion. With this scale, we believe we’ve significant growth opportunities and ability to create upper quartile adjusted EBITDA and free cash flows. We expect Micro Focus to be immediately accretive to our adjusted EBITDA. Micro Focus will benefit from the OpenText Business System to create stronger operations and significant cash flows, and Micro Focus customers will benefit from the OpenText Private and Public Clouds,” adds Barrenechea.
This is based on the terms of a recommended all-cash offer to be made by Open Text Corporation through its wholly-owned subsidiary, OpenText UK Holding Limited (Bidco), to acquire the entire issued and to be issued share capital of Micro Focus at a price of 532 pence per share (the Acquisition), implying an enterprise value of approximately $6.0 billion on a fully diluted basis.
“We intend to fund the all-cash Acquisition with existing cash, new debt and our existing revolving credit facility. OpenText does not contemplate raising any equity to fund the Acquisition. We’re 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,” concludes Barrenechea.
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