Micro Focus’ share price fell to a 19-month low today after a potential buyer ruled out an acquisition of the troubled British IT firm.
Open Text has flat out denied a Bloomberg report last week that the Canadian firm was weighing up a bid.
“Open Text … notes the recent press speculation and confirms that it is not considering a potential acquisition of Micro Focus,” the Ontario-based company said in a statement.
Micro Focus added: “The board of Micro Focus International notes the announcement by Open Text Corporation confirming that it is not considering a potential acquisition of Micro Focus.”
Shares in Micro Focus dropped six per cent to 1,030p in early trading after falling as low as 1,014p as shareholders sold out of the company, which sells legacy IT systems to enterprises.
Micro Focus also poured cold water on the report after Bloomberg cited sources “familiar with the matter” that Open Text had consulted advisers despite Micro Focus’ big debt pile and slowing growth.
The FTSE 250 firm saw shares nosedive after warning in August that revenue could fall by up to eight per cent for the full year to the end of October, also impacting profit.
It has since accelerated a strategic review of its operations in a bid to improve its performance. That has paved the way for potential asset sales and sparked speculation that the business could be touted to private equity buyers.
Troubles under the Microscope
Micro Focus is struggling after a difficult merger with US giant HP’s software business after purchasing the division for $8.8bn (£6.6bn) in 2017.
Assets that Micro Focus bought include HP’s Autonomy business, which is the subject of an ongoing multi-million pound fraud trial between HP and Autonomy’s founders.
Meanwhile declining sales and profit came as the company warned of a “deteriorating macro environment” leading customers into “longer decision making cycles”.
Chairman Kevin Loosemore sparked fears among investors after dumping £11.6m in shares recently.
Meanwhile the company faced a revolt after establishing a bonus plan for executives worth £268m. It has since promised to overhaul this pay policy.