Micro Focus International, a FTSE 100-listed UK software company with a £4.5 billion market capitalisation, said on September 7 that it had struck an agreement with Hewlett Packard Enterprises to acquire its HPE Software subsidiary in a cash-and-share deal valued at $ 8.8 billion.
It marks the biggest M&A deal by a UK acquirer this year according to data provider Dealogic – eclipsing Vodafone Group’s February agreement to merge its Dutch mobile business with that of Liberty Global’s Ziggo in a €5.7 billion deal – and gives a much-needed shot in the arm to such activity, which has plunged since the UK voted to leave the European Union on June 23.
At $ 58.8 billion, takeover and merger activity by UK acquirers since the start of 2016 is down more than half on the prior-year period. Since the Brexit vote, M&A activity by UK companies stood at just $ 12.6 billion as of September 6, down by more than 80% on the $ 74 billion in the same period a year earlier, with Melrose Industries’ $ 2.8 billion July deal to buy the US manufacturer Nortek the biggest until Micro Focus’s announcement.
Handling the deal for Micro Focus are banking advisers JP Morgan, in the lead role, and Numis, which has been the company’s corporate broker since 2010, according to the deal announcement. Goldman Sachs is advising Hewlett Packard according to a person familiar with the transaction. Goldman Sachs had not returned a request for comment at the time of publication.
The M&A deal is by far Numis’s largest, according to analysis of Dealogic data, and stands at almost four times the size of Micro Focus’s $ 2.3 billion takeover of Attachmate Group in 2014, Numis’s next biggest advisory role. It lifts the firm to 18th in Dealogic’s ranking of advisers on M&A deals involving UK companies in 2016, from 42nd prior to Micro Focus’s announcement.
At Numis, which did not respond to a request for comment by the time of publication, bankers named on the deal include Alex Ham, who took over as co-chief executive from Oliver Hemsley this year, and Simon Willis, a managing director focused on the technology sector, both of whom advised Micro Focus on its Attachmate deal two years ago. They were joined by Tom Ballard, who according to his LinkedIn profile is an associate director in Numis’s UK corporate broking and advisory team.
At JP Morgan, which is also helping Micro Focus line up some $ 5.5 billion of debt financing linked to the deal, the team is being led by Bill Hutchings, head of UK technology, media and telecoms, who joined the bank in January.
Other JP Morgan bankers on the deal, according to Micro Focus’s announcement, are New York-based managing director Ben Berinstein; fellow US-based MD Jay Hofmann; Sanjay Jain, head of technology investment banking in Emea; Dwayne Lysaght, head of UK M&A; and Chris Wood, an executive director in the TMT team.