Open Text Corp.’s top executive defended the acquisition of Micro Focus International Plc at a huge premium, saying his company can help the UK firm with its turnaround.
(Bloomberg) — Open Text Corp.’s top executive defended the acquisition of Micro Focus International Plc at a huge premium, saying his company can help the UK firm with its turnaround.
“Micro Focus is on a great path toward stabilization. We’ve known this business for many, many years,” Open Text Chief Executive Officer Mark Barrenechea said on BNN Bloomberg Television on Friday. “Open Text can add significant value.”
Waterloo, Ontario-based Open Text said Thursday it will acquire Micro Focus for 532 pence a share, 99% above the previous closing price. Open Text was down 12% to C$42.27 as of 10:56 a.m. in Toronto, the lowest level since December 2019.
Open Text Falls as Analysts Mull Micro Focus Deal: Street Wrap
The deal is Open Text’s largest acquisition yet and values the target at about $2.2 billion — $6 billion including debt.
After the merger, Open Text will sell in about 120 countries and have much better scale to compete with larger enterprise-software players, Barrenechea said.
The deal will make Open Text look more like SAP SE and Oracle Corp. “and that’s good company to be in,” he said. The combined entity would have revenue of more than $6 billion and adjusted earnings before interest, taxes, depreciation and amortization of over $2 billion.
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