Micro Focus International plc (LON:MCRO), the global infrastructure software business, today announced that it has agreed definitive terms to sell its SUSE business segment to Blitz 18-679 GmbH, a newly incorporated indirectly wholly-owned subsidiary of EQTVIII SCSp which is advised by EQT Partners, for a total cash consideration of $2.535 billion on a cash and debt free basis and subject to normalisation of working capital.
Transaction highlights
· Micro Focus International plc announces that it has agreed definitive terms for the sale of the SUSE Business for a total cash consideration of $2.535 billion, on a cash and debt free basis and subject to normalisation of working capital.
· The SUSE Business, a pioneer in Open Source software, develops, markets and supports an enterprise grade Linux operating system, Open Source software-defined infrastructure and application delivery solutions that give enterprises greater control and flexibility over their IT systems.
· Micro Focus believes the Disposal Consideration represents a highly attractive enterprise valuation for the SUSE Business at approximately 7.9x revenue and 26.7x Adjusted Operating Profit of the SUSE Business for the twelve months ended 31 October 2017.
· Micro Focus believes EQT provides a strong long term investor for the SUSE Business and allows Micro Focus to continue to focus upon its longstanding and consistent strategy of delivering value to customers and shareholders through effective management of infrastructure software assets in an increasingly consolidating sector.
· The net proceeds will be used in part to pay any tax arising from the Transaction and to repay a proportion of the existing Micro Focus Group debt. The remainder of the net proceeds will be used for general corporate purposes and/or returned to Shareholders through whatever mechanism the Board may in its discretion determine at the relevant time.
· Completion of the Transaction is currently expected in the first quarter of Calendar Year 2019.
Kevin Loosemore, Executive Chairman of Micro Focus, commented:
“Micro Focus started working with the SUSE Business in November 2014, following our acquisition of The Attachmate Group. At the time of the acquisition, the SUSE Business represented just over a fifth of the revenues of The Attachmate Group, which we acquired for $2.35 billion. It was clear from the outset that the SUSE Business was an outstanding business with great people, great customers and fantastic products in a vibrant and dynamic market. In the three and a half years since that time we have invested significantly in the SUSE Business. Executing as a separate product portfolio has enabled Nils Brauckmann, CEO SUSE, and the team to deliver against the SUSE Business growth charter and enabled the SUSE Business to become a market leader in enterprise-grade, open source software-defined infrastructure and application delivery solutions to the benefit of customers and partners.
We are therefore delighted that this investment has generated substantial Shareholder value and provided further vindication of our portfolio approach to software management.
The Transaction delivers compelling value for Micro Focus and provides the SUSE Business with a strong, long-term investor to support it in its next phase of growth.
We will evaluate how best to deploy the net proceeds of the Transaction for the benefit of Shareholders over the coming months.”
As previously announced, Micro Focus will issue its interim results for the six months ended 30 April 2018 on Wednesday 11 July 2018. The interim results analyst presentation will be webcast live and the recording will be posted on the Micro Focus website, https://investors.microfocus.com/.
Due to the value of the Transaction relative to the market capitalisation of Micro Focus, the Transaction is classified as a Class 1 transaction pursuant to the Listing Rules. As a result, Shareholder approval is required.
A circular containing further details of the Transaction and containing a notice convening a general meeting will be sent to Shareholders as soon as practicable which is currently anticipated to be by the end of July 2018. This preceding summary should be read in conjunction with the full text of the following announcement and its appendices, together with the circular.
