#DiscovertheNew Micro Focus

The Micro Focus/HPE Software merger transaction completed on 1 September this year with the listing of consideration shares on the London Stock Exchange (“LSE”) and the simultaneous listing of American Depositary Shares (“ADS”) on the New York Stock Exchange (“NYSE”). Due to the size of the transaction relative to the size of Micro Focus, it was classified as a reverse takeover pursuant to the Listing Rules. As a result, shareholder approval was required and this was given by more than 99% of shareholders at a General Meeting on 26 May 2017.

This merger has created a global infrastructure software business with pro-forma revenues in the 12 months to 30 April 2017 of approximately $4.4bn and Underlying Adjusted EBITDA of approximately $1.4bn making it one of the largest dedicated software companies in the world and a leading technology stock on the LSE. Going forward, we will align our financial year end to 31 October and will initially report an 18 month financial period ending 31 October 2018. This will enable us to launch the new Company’s financial year with effect from 1 November 2017.

We have believed for some time that there are significant segments of the infrastructure software market that have matured. The response to this is consolidation. Like Micro Focus’ Attachmate Group (“TAG”) and Serena acquisitions, the combination with HPE Software has clear business logic to extend Micro Focus’ market presence in mature infrastructure software segments; to increase the operational efficiency of the combined Group; to deliver effective product management focused on customer centred innovation and improve sales productivity. It is 100% consistent with the Company’s strategy which has not had any significant changes from the plan laid out five and a half years ago. Micro Focus sets out to deliver consistent long-term shareholder returns of between 15% and 20% per annum.

Micro Focus expects the merger to enhance adjusted earnings per share by 30 April 2019 and thereafter, with scope for further benefits as operational improvements are realised across the Enlarged Group. The businesses of Micro Focus and HPE Software, which operate in largely adjacent and complementary product areas, shared a number of important attributes:

  • both Micro Focus and HPE Software were well established enterprise software vendors operating at a global scale with a presence in all significant international markets;
  • both Micro Focus and HPE Software held a portfolio of software solutions organized into different product groups which addressed specific aspects of the infrastructure software requirements of a substantial installed base of large enterprise customers; and
  • both Micro Focus’ and HPE Software’s respective primary revenue generating product portfolios were predominantly mature solution sets which are embedded within the IT infrastructures of large corporate customers.

The merger represents a substantial opportunity to:

  • create significantly greater scale and breadth of product portfolio covering largely adjacent areas of the software infrastructure market, thereby creating one of the world’s largest pureplay infrastructure software companies;
  • add a substantial recurring revenue base to Micro Focus’ existing product portfolio, together with accessing important new growth drivers and new revenue models; and
  • accelerate operational effectiveness over the medium term, through the alignment of best practices between Micro Focus and HPE Software in areas such as product development, support, product management, account management, and sales force productivity, as well as achieving operational efficiencies where appropriate.

Related documents

Circular re Proposed Merger with the Software Business Segment of HPE

Prospectus re Proposed Merger with Seattle SpinCo, Inc.

Form F-4

Completion of merger with HPE software