Micro Focus International plc (NYSE: MFGP) is a U.K.-based enterprise software company, which offers a product line consisting of app modernization, connectivity solutions, IT operational management, cybersecurity and more. Shares of the enterprise solutions provider are skyrocketing 94% through early trading on Friday, August 26, 2022. Over the past three months, Micro Focus has seen average daily volume of 415,050 shares. However, volume of 4 million shares or dollar volume of around $24.44 million, has already exchanged hands through early trading.
Shares of Micro Focus are surging after the company announced that it has entered into an agreement to be acquired by OpenText (NASDAQ: OTEX) for a purchase price of $6 billion in cash or 532 pence per share. Over the past trailing twelve months, Micro Focus has pro forma revenue of $2.7 billion. The purchase price effectively provides a 2.2x multiple on Micro Focus’s pro forma revenues.
OpenText estimates cost synergies to hit $400 million, as management sees “meaningful expansion of cloud revenues, adjusted EBITDA and cash flows in fiscal 2024,” according to the press release. Both management teams estimate the transaction to close during the next six quarters, pending approvals from shareholders and regulators.
“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,” said OpenText CEO & CTO Mark J. Barrenechea. “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.”
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