Borland Software Corporation announced that Micro Focus International plc and Borland have entered into a definitive agreement under which Micro Focus will acquire all the outstanding shares of Borland in a cash merger transaction. Micro Focus will acquire each outstanding share of common stock of Borland for $1.00 per share, representing a premium of 25% over the closing share price of Borland’s common stock on May 5, 2009 of $0.80 and a premium of approximately 67% over the average thirty trading day closing price of $0.60. The aggregate transaction value is approximately $75 million.
In January, we asked the question “Will Borland Survive Yet Another Crisis?“, now we have the answer. And it is negative. After selling its development tools to Embarcadero in May 2008 and loosing 15% of its workforce and its CEO in January, Borland makes a final step to cancel 26 years of existence as a vendor of software development tools. Best know for its original Cobol product, Microfocus expands with this acquisition its portfolio of software development tools. The same day, it acquired the automated testing products of Compuware.
It remains to be seen what will Micro Focus will do technically with Borland products, that are also mostly the results of former Borland acquisitions, and Compuware solutions. It doesn’t seem to have a lot of overlaps between the new tools and the previous solutions sold by Micro Focus. You could think that Borland and Compuware testing tools are operating on the same market, but most of the Compuware quality offer is targeting the mainframe.
Micro Focus is profitable according to its last detailed financial statements issued in 2008. It is also used to integrate acquisitions as it purchased last year NetManage and Liant in June and July. With these two new purchases, Micro Focus gains access to a new customer portfolio. Consolidating the acquired sales and support organizations with it own staff (or in more crude words: “firing people”), it could achieve what Borland was missing these recent years: profits. The deal could bring short term relief to Borland customers as it lifts uncertainties about the support organization. It remains to be seen if Micro Focus will develop significantly the acquired products or if it will just harvest the revenues from the maintenance fees.