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OpenText customers to enjoy Micro Focus app delivery post-acquisition

Enterprise information management focused OpenText is acquiring IT operations management (ITOM) software vendor Micro Focus in a deal worth, including the latter’s cash and debt, a total $6 billion (£5bn).

Mark J Barrenechea, chief executive at OpenText, said the merged software and cloud management vendor would be one of the world’s largest.

“Micro Focus brings meaningful revenue and operating scale to OpenText,” he said, estimating the total addressable market at $170bn.

“We expect Micro Focus to be immediately accretive to our adjusted EBITDA. Micro Focus will benefit from the OpenText Business System to create stronger operations and significant cash flows, and Micro Focus customers will benefit from the OpenText Private and Public Clouds.”

This represented a “tremendous marquee customer base, global scale and comprehensive go-to-market” approach, according to Barrenechea.

“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,” he said.

Micro Focus software offerings target accelerated application delivery and core modernisation requirements for organisations, with a view to simplified “transformations” and reduced complexity. The vendor reported some $2.7bn in pro-forma revenue for the 12 months ending 30 April.

“We intend to fund the all-cash acquisition with existing cash, new debt and our existing revolving credit facility,” Barrenechea said.

According to OpenText,“expected cost synergies”, including a Micro Focus cost savings programme estimated as worth about $300m, net of inflation, comprise $400m.

Greg Lock, chair of Micro Focus, said OpenText “shares our values”.

“The premium offered demonstrates the progress we have made transforming the business,” he added.

( Photo by charlesdeluvio on Unsplash )

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