- Open Text Corp OTEX subsidiary OpenText UK Holding Limited agreed to acquire Micro Focus Intl PLC MFGP for 532 pence per share, implying an enterprise value of $6.0 billion.
- The purchase offer is roughly twice Micro Focus's closing price on August 25 ($3.13) before news of the takeover came to light.
- Micro Focus is a software company with $2.7 billion pro forma trailing twelve months (TTM) revenue for April 30, 2022.
- OpenText CEO & CTO Mark J. Barrenechea said, "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 have 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."
- OpenText looks to fund the all-cash deal with $4.6 billion in new debt, $1.3 billion in cash, and a $600 million draw on the existing revolving credit facility.
- OTEX held cash and equivalents of $1.7 billion. The acquisition is expected to close in the first quarter of calendar 2023.
- Price Action: MFGP shares traded higher by 93.61% at $6.06 in the premarket on the last check Friday.
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