UK tech titan Micro Focus nearly doubles in value following OpenText’s £5bn takeover
Micro Focus nearly doubles in value this morning as shares soar 93 per cent following OpenText’s £5bn takeover announcement.
The offer of £5.32 per share is a 98 per cent premium on Micro Focus’s share price at yesterday’s close, and heralds the continuing trend towards big transatlantic sell-offs.
The FTSE 250 IT firm has faced a tide of tough times, and issued major profit warnings in 2018 and 2019.
Meanwhile, OpenText is one of the world’s largest software providers, valued at around $13bn.
If the takeover of Micro Focus by OpenText is successful, the pair will have a combined market worth of $170bn.
However, the news comes as a number of other British firms announce that they would be sold to US counterparts.
Earlier this month, bosses at the iconic Ted Baker said they had agreed an all-cash offer with the US-based bidder for around £211m.
It came hours after UK tech darling Darktrace was in early-stage takeover talks with US private equity giant Thoma Bravo, and was followed by Newcastle-based Go Ahead’s shareholders gave the OK to a takeover by an Aussie-Spanish consortium.
While M&A volumes have slowed from a frenzied year of foreign takeovers last year totalling £76.7bn according to ONS figures, legal experts said the price tag of UK PLC had retained its appeal to overseas buyers.
“Favourable exchange rates mean that UK targets are comparatively cheaper for US buyers, exacerbated by depressed valuations for certain UK businesses in the face of recessionary pressures,” Clifford Chance M&A partner Katherine Moir told City A.M.
Corporate partner at law firm Eversheds Sutherland Jon Gill similarly said he expects to “see more such transactions in the months to come” as US private equity giants remain flush with cash and prices of UK tech firms in particular remain subdued.
UK firms are trading at around 10 times 2023 earnings, far lower than in the US. Firms including Morrisons, Stock Spirits and John Laing have all been picked up by private equity over the past two years, amongst a host of others.
The raid on foreign firms has caused disquiet in some quarters however as political figures grow wary of the mass sell-off of British assets overseas.
If Darktrace were to be picked up by Thoma Bravo it would be seen as a blow to the UK’s tech community, with the firm often referred to as a shining light in the industry, and play into fears that London is lagging other bourses as a listing destination.