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Micro Focus to acquire Serena Software for $540 Million

Overview

Travers Smith has advised international software and application management solutions group Micro Focus on its proposed acquisition of Serena Software, a leading provider of enterprise software focused on providing Application Lifecycle Management products for both mainframe and distributed systems.

Micro Focus will acquire Serena Software on a cash and debt free basis for an enterprise value of $540 million in cash, to be settled through the repayment of Serena Software's net indebtedness at completion (estimated at approximately $252 million) and the purchase of Serena Software’s entire share capital for the balance of approximately $288 million, subject to customary working capital and other adjustments. The acquisition will build on Micro Focus’ 2014 merger with the Attachmate Group and enhance its status as a leading global infrastructure company. Completion is conditional on the receipt of competition clearances in the USA and Germany and is expected to take place in May 2016.

The transaction is being funded through Micro Focus’ existing cash resources together with an extension to Micro Focus’ existing revolving credit facility, which is currently undrawn, from $225 million to $325 million and equity finance of approximately £150 million (approximately $216 million) through a placing underwritten by Numis Securities.

A member of the FTSE 250, Micro Focus is a provider of innovative software that allows companies to improve the business value of their enterprise applications. Its market-leading software is used by more than 20,000 customers, with millions of licenced users, among whom are some of the world’s largest businesses. Micro Focus operates from more than 37 offices worldwide, with a workforce of more than 4,500 employees.

Founded in 1980, privately-held Serena Software is a leading provider of enterprise software focused on providing Application Lifecycle Management products for both mainframe and distributed systems. Serena Software's customers are typically highly regulated large enterprises, across a variety of sectors including banking, insurance, telco, manufacturing and retail, healthcare and government. Serena Software's position in the Source Code Change Management (SCCM) segment, complements the Micro Focus product portfolio in COBOL Development, Host Connectivity, and CORBA.

Travers Smith’s team advising long-standing client Micro Focus was led by Head of Corporate Spencer Summerfield, who was supported by corporate associates Tom Coulter and Jonathan Walters. Additional specialist advice was provided by associate Stephen Whitfield in competition, and partner Simon Yates in tax. A team led by Spencer Summerfield also acted for Micro Focus on its high-profile merger with the Attachmate Group in 2014.

US advice was provided to Micro Focus by Wilmer Cutler Pickering Hale and Dorr LLP. Serena Software was represented by Kirkland & Ellis. Other advisers on the transaction included Numis Securities and Strategic Capital Associates.

Spencer Summerfield commented:

"Micro Focus’ acquisition of Serena Software is a significant development, demonstrating the continued success of Micro Focus in executing its buy-and-build strategy. We are very pleased to have assisted Micro Focus on this important transaction, which will help consolidate Micro Focus’ position as a global leader in the software marketplace.