Micro Focus gets a bid approach

I finished my last post on the 18^th Apr 11  Micro Focus revisited with the words “In our sector, shareholder value is enhanced by either the expectation of growth (note the use of the word ‘expectation’) or because of the development of a bid premium” and suggested that in Micro Focus’ case it would be the latter.

We didn’t have to wait long. Today it was announced that Micro Focus had indeed received a bid approach and were considering this - plus all the usual caveats and warnings that the bid might well not proceed etc. But it was enough to send the shares up 7% - that’s a 24% rise since 15^th Apr 11 when Nigel Clifford departed as CEO.

We are of course not party to who the bidder might be. Micro Focus’ nearest competitors are IBM and HP. But the bid is just as likely to be from a PE house/consortium. Alternatively another mid ranking player might be making a consolidation play. Regardless shareholders have something to cheer about at last.

Note – Richard Holway is a long term shareholder in Micro Focus.