(By Philip Carnelley, 1 July 08:30) Micro Focus has raised its offer for Borland to $1.50 per share, in cash, valuing the company at $113m – just 65% of revenues, but 2.3x its value when Micro Focus made its initial bid. Remember, Borland is loss making and shrinking. At a price 30% higher than the previous offer, and almost 90% higher than the first, it shows just how much CEO Steve Kelly has set his heart on Micro Focus becoming a force in testing software. Surely this is his ‘best and final’ offer. We don’t know much about Company A, the mystery bidder described only as a ‘financial buyer’. Is it a PE house that thinks it can make a return by turning Borland into a cash cow? Or does it have a ‘buy and build’ software-testing strategy? If so, who’s next?
By trumping Company A's offer (of $1.25) so comprehensively, Micro Focus clearly wants to put this deal to bed and is hoping to persuade Borland stockholders (who meet on 22 July) to do the same. No doubt the Borland board are delighted that the price has soared so high – they have recommended the new offer, as well they might. However Micro Focus must reassure the market that it is not overpaying. Even with Borland on board, its software testing share will remain well behind the market leader, HP.
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