Micro Focus buys bigger US rival for $1.2 billion

Computing services firm Micro Focus International today bought its bigger American counterpart The Attachmate Group for $1.2 billion (£730 million) in a merger that should triple the UK firm’s business.

Shares in Micro Focus, based in Newbury, Berkshire, soared nearly 12% as traders welcomed what executive chairman Kevin Loosemore called a “transformative” deal.

Under the terms of the deal, Attachmate’s parent company Wizard, will take a stake of about 40% in the enlarged company.

The business will have annual sales of about $1.4 billion.

Numis Securities advised Micro Focus on the deal which will require the merged group to refinance $1.7 billion of debt, largely a legacy from Attachmate.

Bank of America Merrill Lynch, HSBC, RBC Capital Markets, Goldman Sachs and Credit Suisse are underwriting the financing.

Numis said in a note: “Attachmate shares considerable similarity with Micro Focus in our view.”

Micro Focus shares rose 99p to 941.5p — a record high since its 2005 float — giving it a valuation of £1.3 billion.

Micro Focus said a previously announced 60p-a-share special return to shareholders will go ahead and is not “conditional” on the merger.