Micro Focus share price rises after UK company announces $540m deal to acquire US firm Serena Software

William Turvill
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Micro Focus has been "tracking" Serena Software for a number of years (Source: Getty)

UK software company Micro Focus has announced a $540m (£379m) deal to acquire US firm Serena Software.

Privately-owned Serena Software is headquartered in California, but is managed from Hillsboro, Oregon, and St Albans in the UK. It also operates in 10 other countries.

Serena reported revenues of $176.2m in the year to 31 January 2015 and adjusted underlying earnings before interest, taxation, depreciation and amortisation (Ebitda) of $87m.

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Micro Focus will buy the firm on a cash and debt-free basis for an enterprise value of $540m.

The UK company will buy Serena's net debt, which totals around $252m, and purchase its share capital from the vendors – principally funds managed by US private equity firm HGGC and a trust related to Serena's founder – for about $288m.

The deal is being funded through existing cash resources together with additional debt and equity finance arranged through Barclays, HSBC and Numis Securities. Micro Focus said the deal will be part funded through a $216m placing underwritten by Numis Securities.

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The transaction is expected to enhance Micro Focus earnings in the year ending April 2017. Just before 1pm today, Micro Focus's share price had risen nearly two per cent to 1,493p.

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Micro Focus expects its net debt to stand at around $1.3bn at its year-end, 30 April 2016, and will increase by between $335m and $345m following completion of this transaction.

Kevin Loosemore, executive chairman of Micro Focus International, said: “We have been tracking Serena for a number of years and are encouraged by the current management team’s recent management of a mature infrastructure software company in a similar way to Micro Focus."

He added: “This acquisition is wholly aligned with our strategy and further strengthens our existing customer and partner offers.”

In 2014, Micro Focus announced a $2.35bn takeover of privately-owned US rival The Attachmate Group.

In the year to 30 April 2015, after this acquisition, Mirco Focus reported total revenue of $834.5m, up 99.6 per cent year on year. Attachmate contributed $416m of new revenue.

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