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(Alliance News) - Micro Focus International on Friday said it agreed with Canada's OpenText on the terms of a recommended cash acquisition that values the UK software firm, including its debt, at around GBP5.1 billion.
Under the terms of the acquisition, each of Micro Focus' shareholders will receive 532 pence per share.
Shares in Micro Focus closed at 267.80 pence per share on Thursday in London. The FTSE 250 stock was up 90% at 510.00p early Friday.
Shares in OpenText closed at USD37.27 in New York on Thursday and lost 4.8% in after-hours trade.
The offer values the equity of the Newbury, Berkshire-based enterprise software maker at GBP1.8 billion, on a fully diluted basis.
OpenText is a Ontario, Canada-headquartered software firm. It is one of the biggest software companies in the country with a market capitalisation of USD10.06 billion.
OpenText explained that the acquisition represents a highly attractive opportunity to it.
"Micro Focus's marquee customer base will strengthen and deepen OpenText's presence in the Global 10,000 and expand OpenText's geographic footprint in North America, Europe, the Middle East and Africa, Asia-Pacific and Japan which is highly complementary to OpenText's geographical presence today. OpenText, with Micro Focus, will possess one of the largest global customer bases and broadest solution suites in enterprise software, addressing a market opportunity of approximately USD170 billion," the firm stated.
The enlarged company is expected to generate USD6.2 billion in annualised revenue and roughly USD2.2 billion in annualised adjusted earnings before interest, tax, depreciation, and amortisation.
Micro Focus said its directors intend to recommend unanimously that Micro Focus shareholders vote in favour of the takeover at a court meeting and the resolutions to be proposed at a general meeting. The transaction is expected to be completed during the first quarter of 2023.
The deal comes five years after Micro Focus acquired Hewlett Packard Enterprise's software arm in 2017 as part of a reverse takeover for USD8.8 billion.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.8% at 7,528.32
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Hang Seng: up 0.6% at 20,096.88
Nikkei 225: closed up 0.6% at 28,641.38
S&P/ASX 200: closed up 0.8% at 7,104.10
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DJIA: closed up 322.55 points, or 1.0%, at 33,291.78
S&P 500: closed up 58.35 points, or 1.4%, at 4,199.12
Nasdaq Composite: closed up 207.74 points, or 1.7%, at 12,639.27
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EUR: down at USD0.9965 (USD0.9975)
GBP: down at USD1.1804 (USD1.1815)
USD: up at JPY137.00 (JPY136.72)
Gold: up at USD1,758.33 per ounce (USD1,756.33)
Oil (Brent): down at USD100.33 a barrel (USD100.48)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's key economic events still to come
1000 CEST EU monetary developments
0830 EDT US advance economic indicators report
0830 EDT US personal income
1000 EDT US Michigan consumer sentiment index
1000 EDT US Fed Chair Jerome Powell speaks at Jackson Hole economic policy symposium
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UK energy regulator Ofgem announced it will increase the annual energy price cap on default tariffs by 80%. From October 1, energy suppliers in Britain can charge up to GBP3,549 per year for energy bills from the previous cap of GBP1,971. The cap for households on prepayment meter bills will rise by 79% to GBP3,608 from GBP2,017. Ofgem said the increase reflects the "continued rise in global wholesale gas prices", which began to surge as the restrictions across the world eased from the Covid pandemic and have been driven higher to record levels by Russia "slowly switching off gas supplies to Europe". Ofgem regulates energy prices for England, Scotland and Wales, while Utility Regulator sets the price cap in Northern Ireland.Ofgem CEO Jonathan Brearley said: "The government support package is delivering help right now, but it's clear the new prime minister will need to act further to tackle the impact of the price rises that are coming in October and next year. We are working with ministers, consumer groups and industry on a set of options for the incoming prime minister that will require urgent action. The response will need to match the scale of the crisis we have before us. With the right support in place and with regulator, government, industry and consumers working together, we can find a way through this."
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UK Foreign Secretary Liz Truss has pledged "immediate support" to ease the sting of spiralling energy bills in the UK as the Tory leadership contest enters its final stretch. Truss, the favourite to become UK prime minister next month, acknowledged the strain is "clear" at the checkout and the petrol pump, but insisted that Britain will "get through these tough times" – vowing to ensure help is "on its way". Truss previously signalled she could help firms and households with soaring energy bills with direct support this winter. She was looking at assistance "across the board" despite in the past insisting she was focused on slashing taxes, rather than what she termed "giving out handouts".
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Truss said "the jury's out" on whether French President Emmanuel Macron is a "friend or foe" to Britain. "If I become prime minister, I would judge him on deeds not words," Truss told a hustings event of applauding Conservative party members, when asked the question by the host. "The jury's out," she added. Asked the same question earlier at the evening event, rival leadership contender Rishi Sunak had promptly replied "friend". Truss, 47, leads the former finance minister by wide margins in polls of the Tory grassroots set to chose their next leader, who will then become prime minister. The winner will be announced on September 5.
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German consumer confidence is at rock-bottom as Europe's biggest economy faces the prospect of huge energy bills heading into the winter, a key survey showed. Pollster GfK's forward-looking barometer fell to minus 36.5 points for September, the lowest level since its records began in 1991, following a revised August reading of minus 30.9 points. "The sharp rise in the propensity to save this month is causing the consumer mood to continue its steep decline," said GfK consumer expert Rolf Buerkl. "The fear of significantly higher energy costs in the coming months is forcing many households to take precautions and put money aside for future energy bills."
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BROKER RATING CHANGES
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JPMorgan cuts Intercontinental Hotels group to 'neutral' (overweight) - price target 5,900 pence
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Barclays raises Harbour Energy price target to 735 (715) pence - 'overweight'
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COMPANIES - FTSE 250
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Fund management firm JTC said it will acquire non-deposit trust company New York Private Trust Co in cash for an undisclosed sum. NYPTC is headquartered in the US state of Delaware and offers a broad range of fiduciary services, including trust services, estate administration services, and white label trust services to high net worth and ultra-high net worth individuals and families and corporate clients. JTC said the proposed acquisition of NYPTC supports its strategy to further develop its presence in the high growth US market and to develop a US domestic trust services offering. Further, NYPTC is highly complementary to JTC's existing private client operations in the US, which have grown organically since 2013 and include offices in Miami, New York and South Dakota, JTC said.
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COMPANIES - SMALL CAP
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A strike by journalists at newspaper owner Reach planned for Friday has been postponed after their union agreed to enter into immediate negotiations. Members of the National Union of Journalists at Reach, including the Daily Mirror, Daily Express and Manchester Evening News, had voted to walk out on Friday. On Thursday evening the NUJ accepted a proposal by the company to enter into immediate negotiations, which will be overseen by Acas, the Advisory, Conciliation & Arbitration Service.
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COMPANIES - GLOBAL
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The US and China are near to agreement on measures that would resolve the deadlock over auditing for Chinese companies listed on US stock exchanges, the Financial Times reported. Citing "people familiar with the matter", the FT said Hong Kong bankers were told of a possible deal this week. The Nasdaq Gold Dragon China Index of large Chinese technology companies listed in New York closed Thursday up 6.3%. A law passed by US Congress back in 2020 put Chinese companies under scrutiny, by mandating that the Public Company Accounting Oversight Board should have the ability to inspect audits of US-listed foreign firms every three years. The US set a deadline of 2024 to comply or be kicked off US exchanges, putting over 200 of Chinese firms at the risk of delisting in the US, including one of the world's largest online retailers Alibaba. The PCAOB said any deal would grant the US full access to Chinese auditors.
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Friday's shareholder meetings
no events scheduled
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By Tom Waite; thomaslwaite@alliancenews.com
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