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Shares in Micro Focus, the FTSE 100 software group, dropped 12 per cent in early trading after the company warned of falling sales at the business it is buying from Hewlett Packard Enterprise.

In a trading update ahead of its full-year results, Micro Focus said its own growth in the year to April had been weak but in line with earlier forecasts, with sales expected to be between flat and a 2 per cent decline on a constant currency basis.

However, the company added that it expects HPE Software to report a 10 per cent decline in revenues, driven by weakness in its licence and professional services business.

The results suggest a particularly weak start to 2017 for HPE Software, which had previously reported an 8 per cent decline in the three months to January after enjoying slight growth in the previous 12 months.

Micro Focus agreed to buy the unit from its larger rival HPE for $8.8bn last year, in what will be the largest deal the acquisitive group has completed in its history.

At publication time, Micro Focus was the worst performer on the FTSE 100 and All-Share indices, with shares in the group down down 12 per cent to £23.21. The shares were on track for their biggest one-day fall since 2011.

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