Open Text is offering 532 pence (about US$6.30) per Micro Focus share, a 99 per cent premium over Thursday’s closing price.
Open Text said that it will fund the acquisition with US$4.6 billion in new debt, US$1.3billion in cash, and a US$600 million draw on its existing revolving credit facility.
The US$6 billion purchase price, inclusive of Micro Focus’ cash and debt ($4.4 billion debt according to its latest earnings report), is 2.2x Micro Focus’ pro forma TTM (Trailing Twelve months) revenues and 6.3x Micro Focus’ pro forma TTM adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).
Open Text says that the acquisition is expected to generate a total of US$800 million in cost synergies, which includes Micro Focus’ US$300 million cost savings program.
The deal is expected to close in the first quarter of calendar 2023.
“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,” said OpenText chief executive officer (CEO) and chief technical officer (CTO) Mark J. Barrenechea.