6th May 2009 08:31
6 May 2009
Micro Focus International plc announces strong pre-close; Adjusted EBITDA expected to increase 30% year on year.
Two significant acquisitions to address strategically adjacent $2bn Application Testing / Automated Software Quality (ASQ) market
Micro Focus International plc ("Micro Focus" or "the Group", LSE: MCRO.L), the Enterprise Application management and modernization software company, provides a pre-close update on trading for the twelve months to 30 April 2009.
Micro Focus delivered a solid fourth quarter and second half year performance. Full year adjusted EBITDA is expected to be in the range of US$115 million to US$117 million resulting in adjusted EBITDA margins of approximately 42% and considerably ahead of last year's 38.8% (FY2008: US$88.5 million).
Total Group revenues are expected to grow year on year by approximately 20% (FY2008: US$228.2 million). Excluding the beneficial impact of acquisitions, the Group expects to achieve double digit organic revenue growth in the core business at constant currency. Cash balances as at 30 April 2009 were approximately US$70 million.
In separate announcements today, Micro Focus has announced a recommended cash offer to acquire Borland Software Corporation ("Borland") and an agreement to acquire the Application Testing / Automated Software Quality (ASQ) business of Compuware Corporation, including all related customer contracts, sales, support and development infrastructure and all relevant staff, ("Compuware Testing and ASQ Business"). Acquiring Borland and the Compuware Testing and ASQ Business will give Micro Focus a leading market position in the highly complementary Application Testing / ASQ market. This market is estimated to be worth c.US$2 billion a year and is logically adjacent to Micro Focus' core application management and modernization business. The move into the ASQ market is consistent with Micro Focus' stated strategy of extending in logically adjacent segments to expand its addressable market.
For the twelve month period to 31 December 2008, Borland achieved revenues of US$172 million and in the twelve month period to 31 March 2009 the Compuware Testing and ASQ Business achieved revenues of US$74 million. Borland is being acquired for approximately US$75 million in cash and the Compuware Testing and ASQ Business for approximately US$58 million (US$80 million gross consideration less approximately US$22 million of cash receivable from Compuware Corporation, the majority of which is receivable on completion of the transaction).
Both acquisitions are fully financed and are being funded from existing Micro Focus cash resources supplemented by a new three year revolving credit facility of US$175 million provided through a syndicated loan consortium comprising Barclays, HSBC, Lloyds and RBS. Full details of each acquisition, including the conditions to which they are subject, are provided in separate press releases.
Stephen Kelly, Chief Executive Officer of Micro Focus International plc, commented:
"Micro Focus has experienced a strong close to the fourth quarter and I am delighted with the current market relevance and resilience of the Group. The strength of the core business, combined with the success of the three acquisitions made during FY2009 delivered an excellent scorecard for Micro Focus. Looking forward, the acquisitions announced today position Micro Focus well for significant further future growth."
"Acquiring Borland and the Compuware Testing and ASQ Business is consistent with our strategy outlined in 2006 of combining organic growth with selective acquisitions to extend our addressable market and drive further growth in both revenues and profits. Borland and the Compuware Testing and ASQ Business are complementary to each other and to the Micro Focus core business. The acquisitions will provide the enlarged group with meaningful scale in the attractive global Application Testing/ASQ market."
Further details in relation to the acquisitions are provided in the separate announcements made by Micro Focus today.
Enquiries:
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Micro Focus |
Tel: +44 (0)1635 32646 |
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Stephen Kelly, Chief Executive |
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Nick Bray, Chief Financial Officer |
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Tim Brill, Head of Corporate Communications & IR |
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Financial Dynamics |
Tel: +44 (0)20 7831 3113 |
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Charles Palmer /Haya Chelhot/ Nicola Biles |
Notes to editors:
About Micro Focus
Micro Focus, a member of the FTSE 250, provides innovative software that allows companies to dramatically improve the business value of their enterprise applications. Micro Focus Enterprise Application Modernization and Management software enables customers' business applications to respond rapidly to market changes and embrace modern architectures with reduced cost and risk. For additional information please visit www.microfocus.com
About Borland
Founded in 1983, Borland (NASDAQ: BORL) is the leading vendor of Open Application Lifecycle Management (ALM) solutions - open to customers' processes, tools and platforms - providing the flexibility to manage, measure and improve the software delivery process. To learn more about maximizing the business value of software, visit http://www.borland.com.
About Compuware
Founded in 1973, Compuware provides software, experts and best practices to ensure applications work well and deliver business value. Its unique approach, Business Service Delivery, helps CIOs optimize end-to-end application performance for leading businesses around the world, including 46 of the top 50 Fortune 500 companies. Learn more at www.compuware.com.
This communication is being made in respect of a proposed transaction involving Micro Focus and Borland. In connection with the proposed transaction, Borland will file with the Securities and Exchange Commission a proxy statement, and Borland plans to file with the SEC other documents regarding the proposed transaction. INVESTORS AND SECURITY HOLDERS OF BORLAND ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER FILED DOCUMENTS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
Investors and security holders may obtain a copy of the proxy statement (when available) and other documents filed with the SEC by Micro Focus and Borland free of charge at the SEC's website at www.sec.gov. Investors and security holders of Borland may also obtain copies of the proxy statement (when available) and other documents filed with the SEC by Borland free of charge from Borland by directing a request to Borland, Attention: Borland Investor Relations, Borland Software Corporation, 8310 North Capital of Texas Highway, Building 2, Suite 100, Austin, TX 78731, or by going to Borland's website at www.borland.com.
Borland and its directors and executive officers, may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding Borland's directors and executive officers is contained in Borland's annual proxy statement filed with the SEC on April 8, 2009. Additional information regarding the interests of such potential participants will be included in the proxy statement and the other relevant documents filed with the SEC (when available).
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