August 22, 2011 11:57 am

Micro Focus terminates takeover talks

Micro Focus on Monday said it had ended talks for a takeover of the company after bids for the UK IT business fell short of expectations. The company said it would resume a share buy-back programme.

Shares in the company fell more than 4 per cent to 252p in early trade. The shares are down more than 11 per cent from their high on August 9, when the company said bid talks were still continuing.

Micro Focus, which supports computer mainframe applications for customers like Tesco, in May said it had received preliminary approaches from potential buyers, including Bain Capital and Advent International, the private equity groups.

However, talks appeared to peter out over the summer. Analysts have highlighted concerns over Micro Focus’ slow growth, as a majority of its business is focused on the outdated COBOL programming language, which is gradually falling out of use.

Micro Focus set a deadline for final bids on Friday, but did not get a high enough offer.

“Based on feedback now received from these parties, the board has terminated discussions,” the company said.

In addition to resuming its share buy-back programme, Micro Focus said it was looking at options for redistributing some of its available cash. After paying $32m in dividends in September, the company will have approximately $112m in distributable reserves.

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