According to the deal, the Waterloo's Open Text Corp is offering 532 pence per Micro Focus share, which is a 99 per cent premium to Thursday’s closing price.
The Open Text said that it will fund the cash takeover bid with $4.6 billion in new debt, $600 million from an existing credit line and cash on its balance sheet, reported Bloomberg.
The Newbury-based software firm Micro Focus's stock price jumped 93 per cent to 515.6 pence at in London on Friday, whose stock fell 39 per cent in the past year.
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Micro Focus sells enterprise software to thousands of organisations including Airbus SE, Hewlett Packard Enterprise Co and Kellogg Co. Also, the firm says that its products help companies with cybersecurity, IT operations management, communications and messaging.
Since 2018, the firm has seen declines in its revenue and adjusted earnings before interest, taxes, depreciation and amortisation.
In recent years, the Open Text has made a series of deals to bolster its software portfolio including email encryption company Zix Corp and cybersecurity firm Carbonite Inc.
"Micro Focus brings meaningful revenue and operating scale to OpenText, with a combined total addressable market of $170 billion. With this scale, we believe we have significant growth opportunities and ability to create upper quartile adjusted Ebitda and free cash flows," Barrenechea said in a statement.
The company says it does not anticipate raising any equity to fund the purchase.
As per details, Open Text is paying 2.2 times Micro Focus’s pro forma revenue for the past 12 months and sees the deal closing in the first quarter of 2023.
With Bloomberg inputs.
