Software group Micro Focus has become the UK’s biggest listed technology company after officially completing the $8.8bn (£6.8bn) takeover of Hewlett Packard Enterprise’s software business.
Shares fell in early trading before recovering to £22.70, giving the company a value of almost £10bn after issuing 222m new shares to HPE investors.
The reverse takeover of the HPE software business, the biggest acquisition of a foreign tech firm by a British company, has been completed almost a year after it was first announced.
HPE shareholders now own 50.1pc of the combined group, whose staff numbers have now quadrupled and revenue doubled. The deal sees Chris Hsu, who ran the HPE Software business, take over as Micro Focus chief executive, although executive chairman Kevin Loosemore will continue to have a hands-on role.
Micro Focus, which specialises in maintaining and updating the out-of-fashion IT systems and software that is still used in retailers, banks and elsewhere, has grown steadily through well-timed acquisitions, focusing on cutting costs and improving margins instead of breakneck revenue growth.
The HPE software business it has acquired includes the remnants of Autonomy, the British tech group Hewlett Packard bought in 2011 for $11.7bn. The deal soured a year later when HP wrote off billions of dollars and accused its former management of inflating the company’s value.
HP has since split into two under a plan from chief executive Meg Whitman to protect its lucrative server business from its declining PC and printer division, which was spun off as HP Inc.
Ms Whitman continues to run HPE, the other side of the split, and has sold its software business to Micro Focus as part of a turnaround plan. She was recently in the running for the top job at Uber before it chose Expedia chief Dara Khosrowshahi earlier week.
Micro Focus is expected to cut jobs at the former HPE business in the coming months in an attempt to improve profit margins, which are below those enjoyed elsewhere in the company.
Traders will watch the market closely over the coming days to see whether American HPE investors will hold on to their newly acquired Micro Focus shares.