Micro Focus International's shares surged nearly 93.5% following OpenText's all-cash takeover bid valuing the UK software developer at £5.1 billion. OpenText's 532p-per-share offer is essentially double Micro Focus's price prior to the announcement, highlighting recent trends of overseas interest in UK tech firms. The acquisition is expected to generate $400 million in cost savings and enhance growth opportunities for OpenText, amid a broader consolidation trend in the IT sector.

1. 1/9/22, 1:41 PM
Micro Focus shares surge after takeover bid from Canadian rival | Financial Times
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Micro Focus shares surge after
takeover bid from Canadian rival
OpenText’s all-cash offer values UK software
developer at £5.1bn
August 26 2022
OpenText’s 532p-per-share offer is roughly twice Micro Focus’s closing price on Thursday © Reuters
Micro Focus International’s shares have almost doubled after it became
the latest UK tech company to be snapped up by an overseas group.
Canada’s OpenText agreed to buy the UK software developer in an all-
cash deal that values it at £5.1bn. Micro Focus shares were up 93.5 per
cent in London trading on Friday to 518p.
OpenText’s 532p-per-share offer is roughly twice Micro Focus’s closing
price on Thursday before news of the takeover came to light.
The deal is the latest in a flurry of recent interest in UK tech groups. It
comes just days after French conglomerate Schneider Electric said it was
exploring a full takeover of Cambridge-based software developer Aveva.

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Micro Focus shares surge after takeover bid from Canadian rival | Financial Times
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Last week, US private equity group Thoma Bravo said it was considering a
bid to privatise Darktrace, a Cambridge-based cyber security company,
while cyber security group Avast is in the process of exiting the FTSE 250
after agreeing to merge with its US rival NortonLifeLock for £7.1bn.
If the deals go through they will reduce the number of London-listed tech
companies, leaving Auto Trader and Sage among those remaining in the
FTSE 100 under the software and IT services sector.

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Micro Focus shares surge after takeover bid from Canadian rival | Financial Times
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OpenText, one of Canada’s largest software makers, said it expected cost
savings of $400mn from the deal. The company makes software to power
internal company intranets, emails and manage documents.
Newbury-based Micro Focus develops enterprise software for
businesses, focusing on cyber security, IT management, communications
and messaging. Its software is used by retailers, banks and airlines.
“Micro Focus brings meaningful revenue and operating scale to OpenText,
with a combined total addressable market of $170bn,” said the Canadian
group’s chief executive Mark Barrenechea. “With this scale, we believe we
have significant growth opportunities.”
Micro Focus has more than 11,000 global staff, 8 per cent of whom are
based in the UK.
“This approach was not sought by us but it is a highly complementary
combination,” said Micro Focus chief executive Stephen Murdoch, adding
that there is little product overlap between the two companies.
The move comes as the strength of the dollar vs the pound “makes for
competitive pricing of UK assets”
, said Jonathan Simnett, director at
Hampleton Partners, an M&A and corporate finance consultancy for
technology companies.
“We are in the consolidation part of the
IT cycle and M&A and exits have
become more attractive as investment
conditions tighten,” he added.
Gerard Grech, chief executive of Tech
Nation, a government-backed network
for UK tech entrepreneurs, said the UK
continued to be a “magnet for investors and a natural destination and

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home for US investors”
.
“This is all part of a larger journey whereby UK tech becomes a growing,
circular innovator and job creator. The ripple effect will be more capital
invested in the next generation of UK-based tech start-ups and scale-ups
by new exited angel investors.”