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Micro Focus acquires Compuware quality tools, all of Borland


By David Worthington
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May 6, 2009 —  Micro Focus, best known for its legacy modernization software, has vastly expanded its product portfolio by acquiring Compuware's quality tools and by purchasing all of Borland, an application life-cycle management (ALM) software maker.

Today, the companies jointly announced the deals. Micro Focus will pay Compuware US$80 million for its Quality Solutions product line, and it is purchasing all of the outstanding shares of Borland in a cash merger transaction, for a combined expenditure of $155 million.

Under the terms of the agreement, Micro Focus will pay $1 per share, representing a premium of 25% over the closing share price of Borland’s common stock from yesterday of $0.80, and a premium of approximately 67% over the average 30-day closing price of $0.60, according to Micro Focus.

The merger is a bit surprising; Borland is a better fit for big enterprise vendors such as Hewlett-Packard and Oracle, said Bola Rotibi, principal analyst with Macehiter Ward-Dutton. But banks are sufficiently confident in Micro Focus' ability to do this in lending it the money, she added.

The sale of Compuware’s quality tools business is part of a planned strategy to reorganize the company, said Bob Paul, president and COO of Compuware. "It will allow Compuware to dedicate more investments and management focus to core categories where we can be [the] best in the world. This transaction will result in more differentiated value for our customers and better bottom-line results for our shareholders and employees. Micro Focus will continue to provide the superior level of support that our Quality Solutions customers deserve.”

Rotibi added: “Micro Focus does not strike me as a player in the ALM space, but there are application life-cycle considerations in application modernization, and the company is filling in gaps it sees in its arsenal. Testing is an important requirement. What is a little surprising is that it bought two testing facilities," noting that Borland acquired Segue in February 2006.

Aside from testing, there is little overlap. Borland sold its developer tools subsidiary, CodeGear, to Embarcadero in May 2008.

Borland and Compuware do not have the market share that HP and IBM have in the quality solutions market, but they are still significant players with a long history and large customer footprints, said Rotibi.

"Micro Focus is very keen on making a strategic direction in the testing and QA market," she said, noting, however, that "pound for pound, they are still a small player."




Related Search Term(s): Borland, Compuware, Micro Focus


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Comments


05/06/2009 02:33:52 PM EST

In response to the comment from the analyst that Micro Focus does not appear as a player in the ALM space... In 1998 Micro Focus (in its original incarnation) purchased Intersolv and the PVCS line of ALM products and became Merant. In 2001, Merant sold off the Micro Focus business unit (as well as Data Direct) as the merger was not successful. History does repeat, but I suspect under this management team, the results will be far better than before because of focus on core competencies. This acquisition gives Micro Focus a solid foothold in the non-legacy ALM space.

Glenn


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