Micro Focus acquired by Open Text for $US6B

Canada’s OpenText says it will acquire UK-based multinational Micro Focus in a deal valued at $US6 billion.

The Micro Focus acquisition is notable for its relative size: it’s worth nearly half of Open Text’s current enterprise value of $US12.8 billion, according to data compiled by Bloomberg.

Information and Governance Solutions, including the Content Manager/TRIM product initially developed in Australia, represents $US325 million or 16% of Micro Focus’ $US2B annual software product revenue.

The company has seen declines in its revenue and adjusted earnings before interest, taxes, depreciation and amortization every fiscal year since 2018. 

Micro Focus shares have fallen 39% in the past year. In February Chairman Kevin Loosemore stepped down after it posted a huge drop in profit.

In financial documents presented to investors, Open Text emphasised a major opportunity for revenue growth in “uplifting” Micro Focus customers to the cloud. It stated plans to offer Micro Focus customers “multiple paths to OpenText Cloud.”

Open Text Cloud represented 44% of the company’s total revenue in FY22, whereas Micro Focus SaaS revenue at $US136M was only 5% of total revenue.

"We are pleased to announce our firm intention to acquire Micro Focus, and I look forward to welcoming Micro Focus customers, partners and employees to OpenText," said OpenText CEO & CTO Mark J. Barrenechea.

"Upon completion of the acquisition, OpenText 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.

“Customers of OpenText and Micro Focus will benefit from a partner that can even more effectively help them accelerate their digital transformation efforts by unlocking the full value of their information assets and core systems."