Micro Focus stuns City with £7 billion swoop on HP software arm

Micro has replaced ARM Holdings, bought by Japan’s SoftBank for £24 billion last month, in the FTSE 100.

Loosemore (pictured) has also identified some $600 million in savings by bringing the margins of HPE up to Micro’s level. HP struggled with the Autonomy deal and later wrote off around three quarters of the $11 billion purchase and launched legal action.

Loosemore first made contact with HPE in February and the Brexit vote had no bearing on the deal, he added.

The pair will generate combined revenues of $4.5 billion and $1.35 billion in underlying profit.

Micro, based in Newbury, Berkshire has around 4500 staff, with HPE having around 14,000 staff and contractors. Loosemore said some job losses were likely but “we’re not going to walk in and start slashing” when the deal completes in around 10 months’ time. Despite being a much smaller business in revenue terms, Micro shareholders will own 49.9% of the combined business. Micro’s advisers, JPMorgan and Numis, will land the bulk of the fees, along with HPE’s Goldman Sachs.

ETX analyst Neil Wilson said: “After Arm Holdings was sold to SoftBank, it’s also a sign that the UK tech sector is still capable of making deals in the other direction.

“It’s a confident move,” he said.