# UK’s Micro Focus shares nearly double after Canada’s OpenText agrees $6 billion takeover
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-08-26
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: OpenText to Acquire Micro Focus in $6 Billion All-Cash Deal
Meta Description: Shares of Micro Focus jumped more than 90% as Canadian company OpenText agreed to buy the British enterprise software maker in a $6 billion deal, pushing for
URL: https://financedigest.com/uks-micro-focus-shares-nearly-double-after-canadas-opentext-agrees-6-billion-takeoverhtml

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By Eva Mathews and Krystal Hu

(Reuters) -Shares of Micro Focus soared more than 90% on Friday after Canadian software company OpenText agreed to buy the enterprise software maker in an all-cash deal valuing the British company at $6 billion including debt.

In a push to expand its enterprise information management business, OpenText said on Thursday it would 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’ [shares soared](https://www.financedigest.com/uks-argo-blockchain-shares-soar-on-deals-to-avoid-bankruptcy.html "UK’s Argo Blockchain shares soar on deals to avoid bankruptcy") to a more than one-year high of 518 pence in early trade.

The UK company said it considered the terms of the deal to be “fair and reasonable” and would [recommend shareholders vote](https://www.financedigest.com/hsbc-board-recommends-shareholders-vote-against-spin-off-resolution.html "HSBC board recommends shareholders vote against spin-off resolution") in favour of the acquisition, according to the joint statement on Thursday.

Micro Focus, based in Newbury, Berkshire, has $4.4 billion debt on its balance sheet, [according to its latest earnings report](https://www.financedigest.com/ils-investment-returns-continue-to-outperform-according-to-aon-insurance-linked-securities-report.html "ILS investment returns continue to outperform, according to Aon insurance-linked securities report").

OpenText will fund the [deal by raising $4.6 billion in new debt](https://www.financedigest.com/analysis-no-china-no-deal-bid-to-break-sovereign-debt-logjams-gets-weary-thumbs-up.html "Analysis-No China, no deal: Bid to break sovereign debt logjams gets weary thumbs up"), $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](https://www.financedigest.com/which-kpis-should-a-budding-business-focus-on-for-sustained-growth.html "Which KPIs should a budding business focus on for sustained growth?") 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](https://www.financedigest.com/hsbc-acquires-british-arm-of-stricken-silicon-valley-bank.html "HSBC acquires British arm of stricken Silicon Valley Bank"), retailers and airlines.

OpenText, one of Canada’s largest software makers, said it [expects cost](https://www.financedigest.com/five-cost-of-living-trends-expected-in-2023.html "Five cost of living trends expected in 2023") savings of $400 million after the deal closes. The deal will be subject to regulatory approval.

The company’s U.S-listed [shares were down 4.8% in after-hours trading](https://www.financedigest.com/social-trading-is-the-new-way-that-gen-z-are-getting-their-share-of-the-pie.html "Social Trading is The New Way That Gen Z Are Getting Their Share of The Pie") on Thursday.

Barclays served as [financial adviser](https://www.financedigest.com/smart365-to-unite-advisers-and-technology-for-better-financial-decisions.html "Smart365 to unite advisers and technology for better financial decisions") to OpenText on the deal, which is expected to close in the first quarter of 2023.

[Micro Focus](https://www.financedigest.com/micro-focus-tackles-compliance-requirements-across-gdpr-mifid-ii-and-more-with-digital-safe-10.html "Micro Focus tackles compliance requirements across GDPR, MiFID II and more with Digital Safe 10") was advised by Goldman Sachs and Numis. ($1 = 0.8448 pounds)

(Reporting by Eva Mathews and Yadarisa Shabong in Bengaluru and Krystal Hu in New York;Editing by Vinay Dwivedi, Arun Koyyur and Susan Fenton)


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