Shares in MicroFocus, the UK software company that owns the leading testing and development tools UFT and ALM, have doubled following the announcement of an agreed acquisition bid by Ontario-based software firm OpenText.
Founded in 1976, Micro Focus was at one stage the clear global leader in software test automation, though it has faced steadily increasing competition from newer players, such as Sauce Labs and Tricentis.
Its core test automation platform, Unified Functional Testing (UFT), is designed to accelerate delivery via automation of functional and regression testing under a single tool. Micro Focus completed an $8bn billion acquisition of software management assets from Hewlett Packard Enterprise in 2017. But in March 2018, Micro Focus revealed the merger was 12 months behind its schedule for delivering value and the company’s share price plunged from a 2017 high of close to £29. While it did see a bounce back in 2019, Micro Focus stock had steadily been declining in value and was trading at around 268p per share on August 25th when OpenTest made its 532p per share offer.
With a history of acquiring legacy products, Micro Focus was labelled by some critics as “The place that software goes to die”. But more recently it released tools for robotic process automation (RPA) and in 2020, Micro Focus released a range of AI improvements to the UFT family of testing products.
OpenText specialises in cloud solutions, offering enterprise-level information management and business process solutions, alongside digital process automation and a low-code development platform. Its EnCase product covers a range of security services.
“Upon completion of the acquisition, OpenText will be one of the world’s largest software and cloud businesses with a tremendous marquee customer base, global scale and comprehensive go-to-market,” said OpenText CEO and CTO Mark J. Barrenechea. in the press release.
Barrenechea further added, “Micro Focus brings meaningful revenue and operating scale to OpenText, with a combined total addressable market of $17bn. With this scale, we believe we have significant growth opportunities [...]. Micro Focus will benefit from the OpenText Business System to create stronger operations and significant cash flows, and Micro Focus customers will benefit from the OpenText Private and Public Clouds.”