OpenText, a Canadian-based information management company is acquiring UK software firm Micro Focus International for about $6 billion including debt. The Waterloo-based company is offering 532 pence per share.
OpenText will fund the transaction using $1.3 billion in available cash, $600 million from an existing credit line, and $4.6 billion in new debt.
“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,” Mark J. Barrenechea, OpenText CEO and Chief Technology Officer, said in a statement on the press release.
“Micro Focus brings meaningful revenue and operating scale to OpenText, with a combined total addressable market (TAM) of $170 billion,” Barrenechea also added in the company’s press release.
“With this scale, we believe we have significant growth opportunities… 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.”
The deal comes days after ecommerce giant eBay acquired myFitment, which offers software tools to businesses selling sellers of automotive and powersports parts.
Founded in 1976 and based in Newbury, England, Micro Focus International is a British multinational software and information company. The British firm, which is currently listed on the London Stock Exchange and serves many of the largest companies in the Fortune Global 500 list, provides software and consultancy services.
Micro Focus, which was the first company to win the Queen’s Award for Industry purely for developing a software product, helps businesses maintain and integrate legacy IT technology. Micro Focus has made a number of strategic acquisitions. These include COBOL development tool provider Acucorp. (2007), application lifecycle management developer Borland (2009), and Turkish cybersecurity company ATAR Labs in 2020. for an undisclosed amount
Founded in 1991, OpenText, which is Canada’s largest software company, develops and sells enterprise and information management (EIM) software technology. The company was recently named by Mediacorp Canada Inc. as one of Waterloo Area’s Top Employers (2022) and one of Canada’s Top Employers for Young People (2022).
The company’s EIM software technology manages content or unstructured data for large companies, government agencies, and professional service firms. OpenText’s software is designed to help businesses address information management requirements, including management of large volumes of content, and compliance with regulatory requirements.
OpenText said in a press release that it expects cost savings of $400 million after the billion-dollar acquisition closes. The deal, which will be subject to government regulatory approval, is expected to close in early 2023.