LONDON, UK: OpenText Corporation has agreed to acquire Micro Focus International, the world’s largest enterprise software providers. Under the terms of the acquisition, each Micro Focus shareholder will be entitled to receive 532 pence in cash per share.

The acquisition values the entire issued and to be issued ordinary share capital of Micro Focus at approximately £1.8 billion on a fully diluted basis and values Micro Focus at approximately £5.1 billion on an enterprise value basis.

The acquisition price implies an enterprise value multiple of approximately 2.1 times Micro Focus’s revenues for the year ended 31 October 2021 and 2.2 times for the 12 months ended 30 April 2022.

Information on OpenText and Bidco

· OpenText is a publicly-listed company incorporated under the laws of Canada and its shares are traded on NASDAQ and the Toronto Stock Exchange, with a market capitalisation of approximately US$10 billion. OpenText is a leading provider of information management products and services that help companies all over the world manage the creation, capture, use, analysis and lifecycle of structured and unstructured data. OpenText has a long history of successful transactions executed with focus and speed, both in its traditional and adjacent market segments, and a proven track record of effectively integrating acquired businesses.

· Bidco is a wholly-owned subsidiary of OpenText, incorporated in England and Wales. Bidco has been formed for the purpose of implementing the Acquisition. Save for activities undertaken in connection with its incorporation and the Acquisition, Bidco has not traded before the date of this Announcement.

Information on Micro Focus

· Micro Focus is one of the world’s largest enterprise software providers addressing the technology needs and challenges of its customers globally. Micro Focus’s solutions help organisations leverage existing IT investments, enterprise applications and emerging technologies to address complex, rapidly evolving business requirements while protecting corporate information at all times. Micro Focus’s broad set of technology for security, IT operations, applications delivery, governance, modernisation and analytics provides innovative solutions that the world’s largest organisations need to run and transform concurrently.

· Micro Focus software provides the tools that its tens of thousands of customers need to build, operate, secure and analyse their enterprises. The Micro Focus product portfolio comprises a broad and diverse portfolio of products organised into five product groups with each group containing multiple products – Application Modernisation & Connectivity, Application Delivery Management, IT Operations Management, CyberRes, Information Management & Governance.

· Micro Focus is headquartered in the United Kingdom, with significant operations in the United States and India where the majority of its workforce is based. Micro Focus is listed on the London Stock Exchange and is a member of the FTSE 250 index. The Micro Focus ADSs are listed on the New York Stock Exchange.

Commenting on the Acquisition, Mark J. Barrenechea, the CEO of OpenText, said: “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. 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.

Micro Focus brings meaningful revenue and operating scale to OpenText, with a combined total addressable market (TAM) of US$170 billion. With this scale, we believe we have significant growth opportunities and ability to create upper quartile adjusted EBITDA and free cash flows. 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.

OpenText values Micro Focus’s strong brands and culture and attaches great importance to the skills and experience of Micro Focus’s management team and employees.

We are committed to providing investors with enhanced visibility into our high-value business areas, delivering a net leverage ratio of below 3x within eight quarters, continuing our dividend program, and we expect to have Micro Focus on our operating model within six quarters of closing the transaction.”

Commenting on the Acquisition, Greg Lock, the Chairman of Micro Focus, said: “I am pleased to be recommending OpenText’s offer to our shareholders. The premium offered demonstrates the significant progress we have made transforming the business. OpenText not only shares our values but will offer new opportunities for both our customers and employees. On behalf of the Board I would like to thank Stephen and his team for their hard work and continued contribution to the success of the group.”