Canadian software company OpenText has bought British tech Micro Focus in a deal worth about $6 billion.
In a statement, OpenText, the provider of a data integration platform, said Micro Focus generated $2.7 billion in 12-month revenue for the period ended April 30.
OpenText CEO and CTO Mark Barrenechea said the deal would make OpenText one of the world’s largest software and cloud companies.
“OpenText and Micro Focus customers will benefit from a partner that can help them even more effectively accelerate their digital transformation efforts by unlocking the full value of their information assets and core systems,” he said.
Micro Focus customers include Kellogg, Airbus and Roche Diagnostics, while OpenText counts Bell Canada, Solarisbank and Bumble Bee Foods.
“Micro Focus brings meaningful revenue and operational scale to OpenText, with a combined total addressable market of $170 billion. Micro Focus will take advantage of 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,” Barrenechea said.
Founded in the UK in 1976, Micro Focus had become one of the nation’s leading technology companies, initially specializing in bringing COBOL to non-mainframe environments. It floated on the London Stock Exchange in 2005 and spread its tentacles into enterprise software management and application integration.
In 2009, Micro Focus acquired Borland, a developer of application lifecycle management tools, while in 2014 the company acquired The Attachmate Group for $1.2 billion in shares. The final move brought Novell — the famed networking software giant that once claimed to connect to more PCs than the Internet — and Linux distro hawker SUSE. Micro Focus announced plans to merge with Hewlett Packard Enterprise’s software business segment in 2017.
But a year later it started to turn pear-shaped. A reorganization of the boardroom caused the share price to fall as sales fell short of analyst expectations in January 2018. By the end of March, CEO Chris Hsu had retired, the company’s valuation had halved and questions arose about the wisdom of buying HPE’s software division.
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In April 2018, Hsu had been replaced by former DXC Tech UK boss Nick Wilson. It took until July to transfer SUSE to private equity outfit EQT, a deal with a $2.54 billion price tag.
The rise and fall of Micro Focus can be unique to the company. But it will also raise questions about the UK’s ability to maintain and maintain the tech companies established there. The globally successful semiconductor designer Arm was sold to Japan’s SoftBank in 2019 for approximately $32 billion.
Another successful software company, Autonomy, was sold to Hewlett-Packard in 2011 for $11 billion, a deal that has led to an ongoing lawsuit over the company’s valuation and accounting practices. ®