Micro Focus is on cloud nine after Amazon deal

MICRO Focus’s value soared by more than £200m after the software group struck a partnership with Amazon.

Micro Focus specialises in wringing profit out of old computer systems it acquires by selling software and maintenance services to banks and retailers which use them.

But under the deal with Amazon Web Services, Micro Focus will help firms transition on to the tech giant’s cloud computing platform.

Lots of companies are keen to take their old archaic systems and move them online – a process that makes it easier to analyse data more effectively. It can also help remote working, which has become a much bigger priority for firms during the pandemic.

Micro Focus did not say how much the deal was worth but it has issued warrants to Amazon that would give it access to shares in the company worth £71m.

Striking any partnership with Amazon will be good for the company’s prestige, however, particularly as it will be offering a service that is in increasingly high demand. It also builds on recent success – coming soon after Micro Focus reinstated its dividend and said it was making ‘solid progress’ in the first year of a three-year turnaround plan.

The tie-up sent Micro Focus barrelling to the top of the FTSE250 leaderboard, with shares rising 13.6pc, or 59.7p, to 498.3p, leaving the company worth £1.67bn by last night’s close.

The wider market also made gains as traders digested Chancellor Rishi Sunak’s wide-ranging Budget, which had to encompass both ongoing assistance to businesses and the economy, as well as providing an outline for the UK’s recovery. The FTSE 100 rose 0.9pc, or 61.72 points, to 6675.47, while the more domestically focused FTSE 250 climbed 1.2pc, or 258.41 points, to 21,436.32.

The Footsie was bolstered by a rally among housebuilders after Sunak confirmed much-rumoured reports that there will be a threemonth extension to the stamp duty holiday and a new 95pc mortgage guarantee scheme for first-time buyers.

Barratt Developments rose 7.1pc, or 48.4p, to 732.6p, putting it at the top of the Footsie leader board, while Taylor Wimpey gained 6pc, or 9.95p, to 175.85p.

Persimmon was also on the up by 6.8pc, or 185p, to 2895p after it vowed to return £750m to shareholders this year.

It will pay dividends worth 235p per share overall in 2021, split into three instalments, despite sales falling to £3.3bn from £3.6bn and profits tumbling to £784m from £1bn amid the pandemic.

There was surprise news on the upcoming FTSE 100 and 250 reshuffle, which calculates every three months which businesses will be included on each index.

While many were expecting holiday group Tui (up 2.5pc, or 10.7p, to 447.5p) to move back into the Footsie, it has instead been pipped to the post by Renishaw.

The engineering group’s stock shot higher on Tuesday after it announced it was putting itself up for sale – single-handedly giving it enough of a boost to be upgraded.

This is because FTSE Russell’s reshuffle calculations were made using companies’ closing prices on Tuesday. Renishaw fell 9pc, or 620p, to 6280p last night, as profit takers sold up their stock. It will be joined by fellow engineer, Weir Group (down 1.4pc, or 26.5p, to 1922p), which is also being upgraded, while utility firm Pennon (down 1.1pc, or 10p, to 907.6p) and supermarket stalwart Morrisons (up 1.1pc, or 1.85p, to 171.25p), will drop to the FTSE 250.

Aston Martin revved up 6pc, or 115p, to 2033p after non-executive director Michael de Picciotto bought almost £1m of shares.