Software developer OpenText has announced plans to acquire UK information technology company Micro Focus, in a deal worth $6 billion.
OpenText will pay 532 pence ($6.27) per Micro Focus share, which will be funded by $4.6 billion in new debt, $1.3 billion in cash and $600 million drawn from OpenText’s current revolving credit facility.
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OpenText is Canada’s largest software company, specialising in enterprise information management (EIM), helping firms process their content and engage in essential digital transformation. 90% of the current Fortune 100 companies are OpenText customers, and the company’s network facilitates $9 trillion in commerce annually.
Micro Focus provides enterprise management software solutions to businesses, in competition up to this point with OpenText. One of the UK’s largest software companies, it reported a 12 month revenue of $2.7 billion in the period up to April 2022. It operates five offices in the UK and is headquartered in Newbury, but also operates offices in 48 countries for a total employee count of over 11,000.
The parties have announced intentions for Micro Focus to be on OpenText’s operating model within six quarters of the deal closing, which is expected to happen in the first quarter of 2023.
The acquisition will be subject to antitrust approval by the Competition and Markets Authority (CMA). The CMA has recently intervened in large tech deals such as Microsoft’s planned acquisition of Activision-Blizzard and had registered intent to investigate Nvidia’s acquisition of Arm, which was cancelled shortly afterwards.
OpenText’s 2016 acquisition of Documentum, another developer in the enterprise content management market, prompted Documentum’s co-founder John Newton to argue that the deal would stifle competition and innovation, hurting business customers.
"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 OpenText CEO & CTO Mark J. Barrenechea.
"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."
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