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OpenText Micro Focus acquisition: OTEX buyout of MFGP date and details in full

By Jenny McCall

12:00, 2 September 2022

A image of the OpenText sign outside its headquarters
MCRO stock price soared 94% the day after the announcement was made - Photo: Shutterstock

Canadian software developer OpenText (OTEX) announced on 25 August that it plans to acquire its UK rival and information technology firm Micro Focus International (MCRO), in a deal worth $6bn (£5.18bn).

OTEX, which has been in a partnership for over 20 years with German multinational software company, SAP (SAPd), said that on completion of the deal,  it “will be one of the world’s largest software and cloud businesses with a tremendous marquee customer base, global scale and comprehensive go-to-market.” Here are the details in full.

OpenText (OTEX) will acquire the entire issued and to be issued share capital of Micro Focus (MCRO), at a price of 532p per share. “Implying an enterprise value of approximately $6bn on a fully diluted basis.”

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Micro Focus (MCRO) share price chart

Analysts say OpenText acquisition of MCRO is a positive one

OpenText’s share price has fallen 33% this year and the day after the announcement was made, its share price dropped 15% - which could be due to the fact investors were unable to see the benefit of the MCRO acquisition, given the fact that Micro Focus (MCRO) has had a poor growth outlook and struggled to gain profitability since reporting a $3bn loss in 2020.

Despite OpenText’s stock price decline, analysts believe the deal is a good one.

With that said, MCRO stock price, which has been down for most of 2022, saw its share price soar 94% the day after the announcement was made.

John Abbott, infrastructure analyst with 451 Research wrote in a note: “Micro Focus (MCRO), has seen its share price decline for the past two years, but its fundamentals have remained strong.”

“Moreover, “there’s an opportunity for OpenText to turn the business around. And it has the tools and expertise in place to do so — such as the Titanium cloud integration platform it has recently announced.”

The deal, which is still subject to the approval of Micro Focus shareholders, is set to close in the first quarter of 2023.

OpenText (OTEX), specialises in enterprise information management (EIM), aiding firms with their content and digital transformation. Approximately 90% of the current Fortune 100 companies are OpenText customers.

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Abbott said that once the acquisition has completed, OpenText’s biggest competitor will be IBM (IBM): “It’s an important deal as it combines two of the largest software roll-up companies into one.”

“This is a huge, diverse portfolio of software. Much of it might be termed legacy software. But it’s still critical to a wide range of large customers running mission-critical enterprise applications and infrastructure.”

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What does OpenText (OTEX) acquisition mean for shareholders?

The acquisition is subject to approval from the relevant Micro Focus (MCRO) shareholders, the sanction of the scheme by the court, the receipt of certain antitrust and foreign investment approvals, as well as other terms and conditions.

The deal will be put to Micro Focus (MCRO) shareholders at the “court meeting and the General Meeting.”

“In order to become effective, the scheme must be approved by a majority in number of the Micro Focus (MCRO) shareholders voting at the court meeting, either in person or by proxy, representing at least 75% in value of the Micro Focus shares voted,” a OpenText statement said.

“In addition, a special resolution implementing the scheme must be passed by Micro Focus shareholders representing at least 75% of votes cast at the General Meeting.”

How much will Micro Focus shareholders get?

Under the terms of the acquisition, "each Micro Focus (MCRO), shareholder will be entitled to receive: 532p in cash per Micro Focus (MCRO) share (the "Acquisition Price")."

When will the deal be finalised?

The deal, which is still subject to Micro Focus (MCRO) shareholder approval, will complete in the first quarter of 2023.

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