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Micro Focus Agrees To All Stock Merger With Attachmate, Stock Surges(dpa-AFX International Compact Via Acquire Media NewsEdge) LONDON (dpa-AFX) - Mainframe computer specialist Micro Focus International Plc. (MCFUF.PK, MCRO.L) Monday said it has agreed to acquire privately-held peer Attachmate Group, Inc., sending the stock up by over 10 percent in early morning trade. Combining the capital and debt, the transaction is valued at $2.35 billion before costs. The merger is expected to significantly enhance adjusted earnings per share for Micro Focus shareholders in the current financial year and thereafter. There is scope for further benefits as operational improvements are realized across the enlarged group. The Boards of directors of Micro Focus and Attachmate have reached agreement on the terms of the merger. Micro Focus will acquire the entire issued share capital of Attachmate in exchange for the issue of about 86.60 million ordinary shares to Attachmate's parent company, Wizard Parent LLC. This comes to around 40 percent of the enlarged share capital following the merger. Based on Micro Focus's closing share price as at September 12 of 842.5 pence, the value of the consideration shares to be allotted to Wizard is about 729.6 million pounds or $1.184.0 billion. This, together with net debt of the Attachmate Group as at July 31 of $1.166 billion, values the transaction at $2.35 billion before costs. In the year ended March 31, Attachmate generated revenues of $956.8 million and underlying Adjusted Earnings Before Interest, Tax, Depreciation and Amortization or EBITDA of $312.8 million. Micro Focus believes that the merger will create an enlarged global infrastructure software company with a top three global market position in several key segments, including off-mainframe COBOL, mainframe modernisation, host connectivity and Linux. The combined company's annual revenues are expected to be about $1.4 billion, with underlying adjusted EBITDA and cash generated from operations each amounting to $0.5 billion per annum. When the merger is completed, Micro Focus shareholders will receive a further return of value of 60 pence per share. The company expects to complete the transaction in November 2014. Further, Micro Focus believes that operational efficiencies will be achieved in the medium term, through reducing duplicated central costs and combining corporate support functions where appropriate. The Board will also seek to reduce or reverse areas of revenue decline, accelerate revenue growth where achievable, and improve operating margins. Kevin Loosemore, Executive Chairman of Micro Focus, said, "This is a transformational deal for Micro Focus. The Merger presents a rare opportunity to create a leading infrastructure software company with the scale and breadth to compete successfully at a global level. It provides us with a platform from which I am confident we can deliver significant and sustainable returns." MCRO.L is gaining 10.7 percent in early morning trade at 933.00 pence. Copyright RTT News/dpa-AFX |