FTSE 250-listed software company Micro Focus International is to buy privately-owned US rival The Attachmate Group in an all-share deal valuing the combined firms at $2.35bn (£1.45bn).
Micro Focus said yesterday that following the reverse takeover, its shareholders would own about 60 per cent of the equity in the new group which would be re-listed in London.
The two groups serve major corporate clients such as banks, retailers and airlines that run mainframe computers, helping them modernise the technology so that applications and databases can be accessed by newer systems, such as cloud technology.
“This is a transformational deal for Micro Focus,” said Micro Focus executive chairman Kevin Loosemore. “The merger presents a rare opportunity to create a leading infrastructure software company with the scale and breadth to compete successfully at a global level. It provides us with a platform from which I am confident we can deliver significant and sustainable returns.”
Shares in Micro Focus soared 15.31 per cent on news of the proposed deal to 971.5p in London.
“The proposed $2.35bn acquisition of Attachmate would be a transformational deal, making the company one of the biggest in the UK sector with a combined earnings before interest, taxes, depreciation, and amortisation (Ebitda) of around $510m before potential synergies,” said Investec analyst Julian Yates.
“While this changes the investment story of the business away from a special dividend play... our initial calculations suggest upside to the stock price towards 1,000p or above.”
BEHIND THE DEAL
NUMIS | ALEX HAM
1 Co-head of corporate broking at Numis, Alex Ham has worked on a series of high-profile floats: AO World, TSB and Polypipe.
2 Ham could soon be a two-time winner of the City A.M. Awards, having won Rising Star award in 2011 for his work on the Horizon and Betfair floats, and is now up for Dealmaker of the Year.
As well as Ham, the Numis team working as financial adviser, sponsor and broker to Micro Focus includes Simon Willis, Richard Thomas and Freddie Barnfield. Attachmate is being advised by Morgan Stanley.