Micro Focus Ends Takeover Talks, Resumes Share Buyback
August 22, 2011, 12:03 PM EDTBy Ben Edwards
(Updates with closing share price.)
Aug. 22 (Bloomberg) -- Micro Focus International Plc, a U.K. software provider, said it ended takeover discussions and will instead resume a share buyback program.
The Newbury, England-based company had set a deadline of Aug. 19 for final offers after receiving a preliminary approach in April, it said today in a statement. The offer period has expired, it said.
“As a board we didn’t believe that short-term turmoil in the stock price was any reason why a price should be lower than the value of the company, so our view of the value of the company is no different as it was back in April,” Chairman Kevin Loosemore said today in a conference call. “We are very conscious that private equity buyers by their very nature will always look to get the best possible price because their aim is to buy cheap and get the best possible return, but we actually got no firm offers on Friday.”
The company may buy back more than 12 million common shares, having already bought more than 8 million, according to the statement.
“Micro Focus management faces the challenge of rebuilding market sentiment towards a stock that has been exhaustively examined and cast aside by potential private equity buyers,” analysts from Jefferies International Limited wrote in a note to clients today. “Substantial operational and strategic issues persist and we expect continued pressure on organic growth rates and margins.”
Micro Focus shares fell 3.4 percent to 254 pence at the 4:30 p.m. close in London trading, after earlier falling as much as 12 percent. The stock is down 35 percent this year, giving the company a market value of 502.5 million pounds ($826 million).
Bain Capital LLC and Advent International Corp. were among private-equity funds that had made an approach for the software provider, the company said in a statement in May.
Bain agreed to buy MYOB Pty Ltd., an Australian business management software maker, for an undisclosed sum this weekend, the U.S. private equity fund said in a statement.
--Editors: Chris Peterson, Peter Branton
To contact the reporter on this story: Ben Edwards in London at bedwards35@bloomberg.net.
To contact the editor responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net
