Micro Focus buying Intersolv Stock acquisition of Rockville company valued at $578 million

June 18, 1998|By Mark Ribbing | Mark Ribbing,SUN STAFF

Intersolv Inc., a Rockville software developer and consulting company, is being bought by Micro Focus Group PLC in a stock deal valued at about $578 million.

The deal, announced yesterday, is basically a merger of equals: Micro Focus has 900 employees worldwide and had $157.3 million in revenue in the fiscal year ended Jan. 31. Intersolv, which had $196.5 million in revenue for the fiscal year that ended April 30, has 1,000 employees worldwide, including about 250 in Maryland.

Intersolv stockholders will get .55 of a Micro Focus American depositary receipt, or ADR, for each Intersolv common share. The ADRs, which trade on the Nasdaq market, are worth five of Micro Focus' ordinary shares, which trade in Britain.

The companies declined to forecast the value of the combined company, to be based at Micro Focus' headquarters in Mountain View, Calif. Micro Focus was founded in London in 1976 and moved to Silicon Valley to take advantage of that region's high-tech work force.

Officials said job losses could result from the merger, especially in administration and other areas where the work forces overlap.

However "the job gains are going to far exceed job losses in any merger such as this," said Gary Wright, a senior vice president at Intersolv.

Micro Focus Comptroller Bernie Blegen said it is "too early to say" how many jobs might be lost or whether its Maryland operations will be moved.

The boards of the companies approved the merger yesterday, and officials said they expect to close the deal within 90 days. Approval is required from regulators in the United States and Britain, and from shareholders of both companies.

Micro Focus President and Chief Executive Officer Martin Waters, and Chairman J. Michael Gullard will keep their jobs in the new company. Intersolv President and Chief Executive Officer Gary Greenfield will join the combined company's board of directors but has not been named to a specific executive position.

Micro Focus' Blegen also said it is too soon to tell whether the Intersolv name will be retained.

Both companies sell software products and consulting services, but they have generally served different markets. Micro Focus has specialized in software for mainframe computers, the powerful machines that are the heart of corporate computer systems.

Intersolv has focused on selling software for personal computer networks. It has concentrated more on consulting than Micro Focus.

"We're very, very complementary," said Wright.

Blegen said, "This was an ideal opportunity to accelerate the growth of the companies. Intersolv is a very innovative group."

The announcement was made after markets closed, and Intersolv and Micro Focus requested a halt in after-hours trading in their shares. Trading in both companies' shares was to resume this morning.

Before the halt yesterday, Micro Focus' shares were trading at $42, up $2.25 from Tuesday's closing price. Intersolv shares were trading at $14.50, up 50 cents.

Pub Date: 6/18/98

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