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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the
Month of: November 2021
Commission
File Number: 001-38187
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MICRO FOCUS INTERNATIONAL PLC
(Exact name of registrant as specified in its charter)
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The Lawn, 22-30 Old Bath Road
Newbury, Berkshire
RG14 1QN
United Kingdom
+44 (0) 1635-565-459
(Address of principal executive office)
Indicate
by check mark whether this registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form
20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule
101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule
101(b)(7): ☐
CONTENTS
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Exhibit No.
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Exhibit Description
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99.1
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Proposed
sale of Archiving & Risk Management, dated 03 November
2021
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03 November 2021
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART,
IN, INTO, OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION
Micro Focus International plc
Proposed sale of the Archiving and Risk Management
Business
Micro Focus International plc (the "Company" or "Micro Focus", LSE: MCRO.L, NYSE:MFGP), the
global enterprise software business, is pleased to announce that it
has agreed definitive terms to sell its Archiving and Risk
Management portfolio (the "Digital Safe
business") to Smarsh Inc. (the
"Purchaser" or "Smarsh"), for a total cash
consideration of $375m (subject to customary completion accounts
adjustments based on net debt and working capital) (the
"Transaction") which is payable in full on completion of the
Transaction. Completion is expected to occur in the first quarter
of next calendar year.
The Digital Safe business forms part of the Information Management
and Governance (IM&G) Product Group and includes Digital Safe
products and the complementary offerings of Social Media
Governance, Supervisor and eDiscovery.
Stephen Murdoch, Micro Focus CEO says:
"Micro Focus acquired the Digital Safe business in September 2017
as part of the HPE transaction. Since this date, we are proud of
the progress made, with our focus on customer-centric innovation
delivering significant improvements to the portfolio and enabling
us to begin the transition to a cloud-first business
model.
Looking ahead, Archiving and Risk Management is changing rapidly
and becoming an increasingly specialised area. We believe that by
combining the Digital Safe business with Smarsh, a leading
innovator in this area, our Digital Safe customers and employees
will see significant benefits and be better served for the long
term."
Brian Cramer, Smarsh CEO says:
"We are delighted to announce the acquisition of the Digital Safe
business from Micro Focus. Smarsh focuses its efforts on meeting
the sophisticated risk, compliance and e-discovery needs of
regulated industries. We see significant opportunity in helping our
existing, mutual and future customers to extend the value of their
retention and oversight technology investments and to facilitate
communications data strategies that will meet the challenges of
tomorrow. Upon completion of the transaction, we'll work together
with our new expanded team to deliver this vision to our
customers."
Terms of the transaction and financial impact
In FY21, the Digital Safe business is expected to generate
approximately $109m of revenue, a decline of approximately 11% at
constant currency compared to the prior
year.
The business is expected to contribute $30m of Adjusted EBITDA less
cash costs associated with lease payments in FY21. This
figure also excludes any allocation of overheads from the central
functions which support this business.
As at 30 April 2021, the half year, the total gross assets of the
Digital Safe Business were approximately $373m and net assets were
approximately $277m, including lease obligations totalling $43m.
The transfer of these lease obligations will reduce the Group's net
debt accordingly.
It is the intention of the Board to use the net proceeds of the
Transaction, estimated at $335m net of fees, taxation and
separation costs to reduce gross debt.
Trading statement
Micro Focus will release a trading statement for the 12 months
ended 31 October 2021 on 18 November 2021.
Further information
1.
In FY20, the Digital Safe business contributed approximately $18m
of profit before taxation to the Group. This figure excludes an
allocation of the Group wide goodwill impairment charge which is
estimated to be $111m.
2.
FY21 Adjusted EBITDA less cash costs associated with lease payments
contribution reflects estimated Adjusted EBITDA of $52m less cash
cost of lease payments totalling $22m.
3.
The Transaction is conditional upon all applicable waiting periods
under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976
having expired or been terminated and the completion of all
necessary employee information and consultation requirements in
connection with the Transaction.
4.
In connection with the Transaction the Company and the Purchaser
will also enter into a transitional services agreement which will
set out the terms and conditions under which the Company will
provide various services (such as IT services) to the Purchaser
after completion of the Transaction on a transitional
basis.
5.
FY21 and FY20 are defined as the 12 months ended 31 October 2021
and 2020 respectively.
6.
Smarsh Inc.is a portfolio company of funds managed by K1 Investment
Management LLC.
About Micro Focus
Micro Focus is a global enterprise software company supporting the
technology needs and challenges of the Global 2000. Our solutions
help organizations leverage existing IT investments, enterprise
applications and emerging technologies to address complex, rapidly
evolving business requirements while protecting corporate
information at all times. Our product portfolios are Security, IT
Operations Management, Application Delivery Management, Information
Management & Governance and Application Modernization &
Connectivity. For more information, visit:
www.microfocus.com
About Smarsh
Smarsh is a global leader in electronic communications archiving
solutions for regulated organizations. The Smarsh platform
provides innovative capture, archiving, e-discovery, and
supervision solutions across the industry's widest breadth of
communication channels.
It enables regulated organizations of all sizes to strategically
future-proof as new communication channels are adopted, and to
realize more insight and value from the data in their archive.
Customers strengthen their compliance and e-discovery initiatives,
and benefit from the productive use of email, social media,
mobile/text messaging, instant messaging and collaboration, web,
and voice channels.
Smarsh serves a
global client base that spans top banks in North America and
Europe, along with leading brokerage firms, insurers, and
registered investment advisors. Smarsh also enables federal and
state government agencies to meet their public records and
e-discovery requirements. For more information, visit
www.smarsh.com.
Enquiries:
Micro Focus
Tel: +44 (0)1635 32646
Stephen Murdoch, CEO
Investors@microfocus.com
Matt Ashley, CFO
Ben Donnelly, Head of Investor relations
Brunswick
Tel: +44 (0) 20 7404 5959
Sarah West
MicroFocus@brunswickgroup.com
Jonathan
Glass
LEI: 213800F8E4X648142844
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereto duly authorized.
Date:
03 November 2021
Micro
Focus International plc
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By:
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/s/
Matt Ashley
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Name:
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Matt
Ashley
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Title:
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Chief
Financial Officer
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