British software group Micro Focus International has agreed to buy U.S. firm Serena Software [SILAKS.UL] for an enterprise value of $540 million and will raise $216 million in a placing to part finance the cash deal, it said on Tuesday.
Founded in 1980, privately-held Serena Software is a provider of enterprise software. It is headquartered in San Mateo, California and operates in a further 10 countries.
Micro Focus said it had been tracking Serena Software for several years and will buy the firm on a cash and debt free basis. The UK firm will repay Serena Software's net debt of about $252 million and purchase equity from the vendors, principally funds managed by U.S. private equity firm HGGC and a trust related to its founder, for about $288 million.
"This acquisition is wholly aligned with our strategy and further strengthens our existing customer and partner offers," said Executive Chairman Kevin Loosemore.
The deal, which is expected to enhance Micro Focus' core earnings in the year ending April 30 2017, will be in part funded through a $216 million placing underwritten by Numis Securities. It is expected to complete in May.
Micro Focus also updated on trading, saying it performed at the upper end of its full year revenue guidance range in the nine months to Jan. 31.
It has guided revenues on a constant currency basis will decline by between 2 percent and 4 percent.
The group said it expected net debt at its April 30 year-end, excluding the net proceeds of the placing, to be in the range of $1.31 billion to $1.33 billion and will increase by between $335 million and $345 million immediately following completion of the deal.
Shares in Micro Focus were trading up 0.3 percent at 1,470 pence, valuing the business at 3.2 billion pounds ($4.6 billion).
(Reporting by James Davey, Editing by Paul Sandle)