Micro Focus (LON:MCRO) has inked a deal to sell its SUSE business for $2.54 billion, the blue-chip company has said. The move comes after the blue-chip group warned on full-year revenues earlier this year.
Micro Focus’ share price rose in the previous session, adding 3.89 percent to close at 1,323.50p. The stock outperformed the broader UK market, with the benchmark FTSE 100 index ending the session 0.28 percent higher at 7,636.93 points. The group’s shares have lost more than 41 percent of their value over the past year, as compared with a near four-percent rise in the Footsie.
Micro Focus sells SUSE
Micro Focus announced in a statement this morning that it had agreed definitive terms to sell its SUSE business segment to Blitz 18-679 GmbH, a newly incorporated indirectly wholly-owned subsidiary of EQTVIII SCSp, for a total cash consideration of $2.535 billion. The transaction is expected to complete in the first quarter of next year.
“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,” Micro Focus’ chief executive chairman Kevin Loosemore commented in the statement, adding that the “company would evaluate how best to deploy the net proceeds of the Transaction for the benefit of Shareholders over the coming months”.
The FTSE 100 group noted that the board is planning to use the net cash proceeds in part to pay any tax arising from the deal, as well as repay a proportion of the company’s existing debt, with the remainder to be invested and/or applied for general corporate purposes, and/or returned to shareholders.
Analysts on FTSE 100 group
As of June 29, the consensus forecast amongst 13 polled investment analysts covering Micro Focus for the Financial Times advises investors to hold their position in the company. According to MarketBeat, the blue-chip tech group currently has a consensus ‘hold’ rating and an average price target of 1,352.22p.