(By Philip Carnelley – Friday 26th June 2009 9:45am). The‘mystery buyer’ for Borland has re-emerged to spoil the Micro Focus party. In a brief statement this morning Micro Focus said that Borland “has received a preliminary non-binding indication of interest from another party.” The indicative bid is $1.25 cash per Borland share vs Micro Focus’ recently raised $1.15 offer (see Micro Focus ups the ante for Borland). Borland shares jumped 18% in after-hours trading, to $1.35.This news follows Micro Focus’ results, announced yesterday, which were pretty good (see Micro Focus raises profits, revenues as it assimilates acquisitions). At the analyst meeting, Micro Focus executives exuded confidence; we got the strong sense that these are cool heads who have instilled a clear sense of discipline and process into the company, for sales and for M&A. This is far from the rather sleepy company of four years ago (when the present leadership team came in), and miles away – we sincerely hope – from the company that embarked on the ill-fated merger with US-based Intersolv a decade ago.
Micro Focus has assimilated 3 companies in the last year without missing a beat. Adjusted operating profit rose 34% to $116m, giving a margin of 47%, and “true” operating margin, including amortisation etc. stayed steady at 33%. Organic growth was 10%, and, unlike, say, Oracle or SAP (see Oracle – reasons to be cheerful), new license sales held up well last year, growing 10%. Headline growth was 20%, to $274m.
If Micro Focus does land Borland, it will bring considerable operational, marketing and technical challenges. Borland’s product portfolio is broad (some would say unwieldy), it overlaps with others already in the Micro Focus portfolio and, most importantly, it is unprofitable. The question is, how far will Micro Focus CEO, Steve Kelly, be prepared to go to win this increasingly dubious-looking prize?
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