Software provider and IT management consultancy Micro Focus has announced the sale of its Suse open source subsidiary for $2.535bn (£1.93bn) to Swedish private equity house EQT, giving its share price a boost as markets opened.
Suse is worth almost one-third of Micro Focus's business, acquired by the company as part of an all-share purchase of Attachmate for $2.35bn in September 2014.
After later buying up Hewlett Packard Entreprise's software unit for $8.8bn last year, Micro Focus has since been struggling to handle the weight, and is planning on using the proceeds of today's sale to reduce that debt. Some proceeds will also be returned to shareholders.
The news has prompted a six per cent rise in Micro Focus' share price, which now sits up 4.9 per cent in midday trading.
It follows a sharp drop in its share value in March which has only recently begun to recover, as investors became wary of Micro Focus' expansion tactics. The company shed more than half its market value as revenues shifted into decline, prompting a resignation from its chief executive.
Suse is used by banks, universities and Linux software-serving companies across the world, including Daimler, Total and Air India.
Publicly, the subsidiary generated revenue of $303m in the year ending April 2017, with an adjusted operating profit of $98.7m.
Micro Focus believes that the price Suse is being sold for represents around 7.9 times its revenue for the year ending in October 2017.
The deal was advised by Numis, SCA, Jefferies and Arma Partners. Arma also advised Suse on its sale for $210m to Novell in 2003.