Micro Focus International (LSE: MCRO), a software company that breaches the coding gap between old and new IT systems, announced the receipt of merger control clearances from the German Federal Cartel Office and the Austrian Federal Competition Authority for its reverse take-over of the Attachmate Group.
The merger was proposed by the board of Micro Focus on 15th September and agreed in yesterday’s AGM. The £729.6m all-share deal will result in Wizard, The Attachmate Group’s parent company, owning 40% of the enlarged share capital of Micro Focus.
Both companies are well-established enterprise software vendors, and the merger will result in a business operating on a global scale in all significant markets. Management expect the primary benefits of the merger to be improved operational efficiencies created through the “removal of duplicated costs and combining support functions where appropriate”.
Management said the acquisition of the privately owned group was a “rare opportunity to achieve a significant increase in the scale and breadth of Micro Focus” through a business “operating in market segments adjacent and complementary to Micro Focus”.
A proportionate consolidation of shares will accompany the merger, whereby shareholders will receive 0.9825 new ordinary shares for each existing ordinary share held. Shareholders will also receive a return of value of 60 pence per share, a total pay-out of £83.9m or 6% of the current share price, although this is not reliant on the completion of the merger.
The company expects the merger to complete in November 2014, although this depends on the termination of the waiting period under the Hart-Scott-Rodino Act in the United States. The law exists to ensure transactions will not adversely affect US commerce under antitrust laws. Management expects the waiting period to be waived, and as such it has been removed from the expected timetable.
The board believe the merger should deliver total shareholder returns that are superior to those achieved on an organic basis and expect the deal to increase adjusted earnings per share for shareholders in the current financial year.
