Micro Focus to Buy Attachmate in $1.2 Billion Share Deal

By Cornelius Rahn and Claudia Rach

Micro Focus International Plc (MCRO) agreed to buy U.S.-based business-software provider The Attachmate Group Inc. to approximately triple the size of its business.
Micro Focus shares jumped as much as 11 percent in London. The company will pay about 729.6 million pounds ($1.2 billion) in shares to Attachmate’s parent, Wizard Parent LLC, Newbury, England-based Micro Focus said today. That gives Wizard’s owners Francisco Partners LP, Golden Gate Capital, Elliott Management Corp. and Thoma Bravo LLC a stake of about 40 percent in the enlarged company.
Micro Focus supplies software and services to
develop and deploy business applications, and customers include 91 of the Fortune Global 100 companies, according to its website. Houston-based Attachmate’s offerings include distributing the Linux operating system, device management and file hosting. Micro Focus also said it plans to return about 83.9 million pounds to shareholders, equivalent to 60 pence per share.
“This deal is taking the company from its current size to about three times the size,” Chairman Kevin Loosemore said in a phone interview. “By implementing this acquisition we can create significant value” and won’t look for other acquisitions for at least 24 months, he said.
The stock rose 11 percent to 933 pence at 8:43 a.m. in London, the highest price since the company’s 2005 initial public offering. The stock had gained 9.7 percent this year before today.

Growth Opportunities

The joint company will have sales of about $1.4 billion, according to the statement. The deal is expected to be completed in November. Attachmate’s net debt at July 31 was $1.17 billion, bringing the transaction value to $2.35 billion before costs.
“Attachmate shares considerable similarity with Micro Focus in our view, with a broad range of products targeted at development, maintenance and operation of software, a focus on mature systems, but also a range of more modern platforms and new growth opportunities,” David Toms, an analyst at Numis Securities, said in a note.