Micro Focus plays down fears over HP deal

The boss of Micro Focus today brushed off concerns about the software firm’s £7 billion takeover of Hewlett Packard Enterprise’s software assets.

Shares in the FTSE 100 giant — which will combine with HPE’s software business in September —fell 3.6% to 2119p today as it said its current business’s revenues for the six months until October will be “broadly flat”.

That amounts to a 20% share price slump since the start of May when it revealed a shaky quarter for HPE’s software business.

Executive chairman Kevin Loosemore said HPE’s software business is “where we were in 2009/10”.

“It’s lumpy, they have good quarters and bad quarters. Once we own the business we’ll start changing things, making it a bit more predictable. We’re absolutely confident that it’s going to be a stunning deal,” he said.

Broker Canaccord attributed the recent share price decline to “investor concerns around the flow-back of stock from US funds holding HPE, but which may be unable to hold Micro Focus”.

Stripping out takeovers, revenues last year dipped 0.9% as expected to $1.38 billion (£1.1 million), and profits rose 4.2% to $641 million.