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Micro Focus Gains Most in Two Months on Disclosing Approach

Micro Focus International Plc (MCRO), a U.K. software provider whose chief executive officer quit this month after less than a year, was the best performer on London’s main stock market after saying it may receive an offer.

“The board of Micro Focus confirms that it has received a very preliminary, non-binding approach in relation to a possible offer for the company,” it said in a statement today. “There is no certainty that any formal offer for the company will be forthcoming nor as to the price at which any offer might be made.”

The shares rose 22.8 pence, or 6.8 percent, to 360.8 pence at the close of trading at 4.30 p.m., more than any of the other 621 companies in the FTSE All-Share Index.

Nigel Clifford quit as CEO with immediate effect on April 15 two months after the Newbury, England-based company said sales and earnings in the fiscal third quarter ended Jan 31 had missed analyst estimates and that it was unlikely to recover in the current period. Chairman Kevin Loosemore said April 15 his immediate priority was to “deliver the year-end in line with shareholder expectations.”

“There are multiple possible bidders,” said Rajeev Bahl, an analyst at London-based Matrix Corporate Capital LLC, who has a “buy” rating on the stock. “It is a decent quality business that has stumbled recently.”

Possible bidders for Micro Focus include private equity groups and a buyer might have to pay as much as 450 pence a share, Bahl said. The chances of a bid materializing is less than 50 percent, he said.

“The core business is effectively a cash machine,” he said. “They could gear it up to do what it has been doing in a more aggressive fashion.”

To contact the reporter on this story: Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net.

To contact the editor responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net.

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