Proposed Merger between Micro Focus and the Attachmate Group to Create a Leading Global Infrastructure Software Company

Proposed Merger between Micro Focus and the Attachmate Group to Create a Leading Global Infrastructure Software Company

Expands customer proposition to further enable customers to leverage further their prior investments and exploit the latest industry innovation

Enlarged Group will have combined revenue of $1.4 billion and a Group employing more than 4,500 staff, located in all key geographies, and serving more than 30,000 customers

Micro Focus International plc ("Micro Focus" or "the Group", LSE: MCRO.L), the international software product group, announced today that it has reached agreement on the terms of a merger with the Attachmate Group. The Enlarged Group will be a leading global infrastructure software company with combined revenues of $1.4 billion, Underlying Adjusted EBITDA of $0.5 billion and operations in all major geographies, combining the talents of more than 4,500 employees.

The Merger represents a significant increase in the scale and breadth of Micro Focus, combining Micro Focus' strong product franchises with the Attachmate Group product portfolios serving adjacent and complementary market segments. The Enlarged Group would benefit from a top three global market position in a number of key segments, including off-mainframe COBOL, mainframe modernisation, host connectivity and Linux operating systems.

Commenting on the proposed Merger, Kevin Loosemore, Executive Chairman, Micro Focus, said: "There is compelling rationale behind this Merger. Both companies are well established enterprise software vendors operating at a global scale with a presence in all significant international markets. Both hold a portfolio of software solutions which address specific aspects of the infrastructure software requirements of a substantial installed base of large enterprise customers, with no material customer concentration or direct overlap; and both Attachmate and Micro Focus' respective product groups are predominantly mature solution sets which are embedded within the IT infrastructures of large corporate customers."

"The Board believes that the Merger will deliver a more attractive and expanded product offer to customers. The Enlarged Group will provide choices as organisations address increasingly complex IT challenges and strive to preserve business logic and data as they bridge from the old and the new to exploit new technology trends, such as the cloud or mobility", continued Loosemore. "The Board believes that the proposed Merger presents a rare opportunity to achieve a significant increase in the scale and breadth of Micro Focus, with the potential to deliver shareholder returns that are superior to those likely to be achieved on an organic basis."

Attachmate solutions help organizations worldwide put their existing IT assets to work. Built to integrate existing systems and emerging technologies, Attachmate helps organizations extend, manage, and secure essential business information. The Attachmate Group maintains its principal office in Houston, Texas and operates its business from four main distributed offices in Provo, Utah; Houston, Texas; Seattle, Washington and Nuremburg, Germany. It comprises four principal software product portfolios:

Attachmate, which delivers advanced software for terminal emulation, legacy modernization and managed file transfer;
NetIQ provides integrated identity, access, security and data center solutions to help organizations securely deliver, measure and manage computing services across physical, virtual and cloud computing environments.
Novell delivers solutions that make people more productive and work environments more secure and manageable.
SUSE offers Linux and open source solutions, such as SUSE Linux Enterprise Server, that provide reliable, interoperable Linux and cloud infrastructure solutions that give enterprises greater control and flexibility.
"The merger of the Attachmate Group with Micro Focus will result in a greater breadth of solutions, extensive global presence, and significant financial strength," said Jeff Hawn, Chairman and Chief Executive Officer of the Attachmate Group. "The combined company will be even better able to help customers address their business and IT challenges in light of increasing complexity, change and risk."

Like Micro Focus, the Attachmate Group has been in business for over 30 years. It has more than 3,300 employees across 80 offices worldwide from which it serves more than 23,000 customers. Micro Focus' market leading software is used by more than 11,000 customers, with 2 million licenced users, and the Group operates from 37 offices worldwide, employing more than 1,200 employees.

Merger Terms:

In the terms of the proposed Merger, Micro Focus will acquire the entire issued share capital of the Attachmate Group, in exchange for the issue of approximately 86.60 million ordinary shares to Attachmate's parent company, Wizard Parent, LLC ("Wizard"). This is equal to approximately 40.0 per cent of the enlarged share capital following the Merger, assuming Micro Focus' previously announced return of value is implemented. Based on Micro Focus' closing share price as at 12 September 2014 of 842.5p, the value of the shares to be allotted to Wizard is approximately £729.6 million ($1,184.0 million) which together with net debt of Attachmate as at 31 July 2014 of $1,165.8 million gives an enterprise value to the transaction of $2,349.8 million before costs. In the year ended 31 March 2014 Attachmate generated revenues of $956.8 million and Underlying Adjusted EBITDA of $312.8 million.

The Merger constitutes a reverse takeover for the purposes of the London Stock Exchange's Listing Rules, and is subject to the satisfaction of a number of conditions, including, amongst other things, publication of a prospectus relating to the Enlarged Group, applicable regulatory and anti-trust approvals having been obtained, consummation of the refinancing of Micro Focus and Attachmate bank debt and Micro Focus Shareholder approval. Subject to these conditions, the Company currently expects completion of the Merger to occur in November 2014.

Based on revenue at Underlying Adjusted EBITDA for the Micro Focus Group for the financial year ended 30 April 2014 and for the Attachmate Group for the financial year ended 31 March 2014.
Note – Restricted Territory is any one of the United States, Canada, Australia, Japan, the Republic of South Africa and New Zealand.

About Micro Focus:

Micro Focus, a member of the FTSE 250, is an Enterprise Application Modernisation and Testing software company that provides innovative software that allows companies to dramatically improve the business value of their enterprise applications. Micro Focus Enterprise Application Modernization, Management and Testing software enables customers' business applications to respond rapidly to market changes and embrace modern architectures with reduced cost and risk. For additional information please visit www.microfocus.com.

ABOUT ATTACHMATE
Attachmate customers include the world's largest corporations and government agencies that continue to rely on IBM-, HP-, Unisys-, Digital-, and Unix-based systems to run their most important business functions. Formed from the merger of Attachmate, WRQ and NetIQ, the company has more than 40,000 customers representing over 16 million desktops worldwide. Attachmate is headquartered in Seattle, WA.