Micro Focus buys Borland, Compuware’s ASQ biz

Legacy modernisation vendor Micro Focus has acquired Borland, the venerable application lifecycle management (ALM) firm with a torturous recent history, for $75m.

The British firm is also buying Compuware’s testing and automated software quality business for $80m. Micro Focus said that these products, along with those of Borland and Micro Focus’ existing product portfolio, will help to establish the company as a major player in the application testing and application software quality market, which it says is worth an estimated £2 billion globally.

Micro Focus has made five previous acquisitions since November 2006, including Hal, NetManage and Relativity.

The acquisition price for Borland represents a premium of 25% to the closing price of US$0.80 per Borland share on 5 May 2009, and a premium of approximately 67% over the average thirty trading day closing price of US$0.60.

The acquisition will be 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.

Borland’s loss before tax for the 2008 financial year was US$204 million on a US GAAP basis. This included impairment of goodwill of US$185 million. Borland’s gross assets at 31 December 2008 were US$253 million.

Commenting on the proposed acquisition, Stephen Kelly, Micro Focus CEO said: “Micro Focus’ proposed acquisition of Borland represents the next logical stage in Micro Focus’ growth journey. Our organic performance remains strong as reflected in our trading statement also released today, and this transaction will add new scale and breadth to further develop our customer proposition, in an attractive adjacent market to our existing business. I am confident that our successful track record in effectively integrating acquisitions over the last three years equips us well to deliver value to shareholders from this transaction.”

Meanwhile Compuware’s Testing and ASQ Business is said to automate quality processes within the software development function to control, measure and manage the delivery of results and to ensure process consistency and continuous improvement through workflow capabilities.

These products are said to be highly complementary to Micro Focus’ core solutions as they address a logically adjacent portion of the software development and deployment value chain.

“Micro Focus sees significant value for customers and shareholders in this proposed transaction,” said Kelly. “Acquiring the Compuware Testing and ASQ business is a logical extension to our existing application management proposition, and we see strong growth potential in this market. Our successful track record of five effective integrations during the past three years equips us well to rapidly harness the benefits of this proposed acquisition.”

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