Another tech star falls into foreign hands

THE London Stock Exchange (LSE) suffered another devastating blow as one of its last remaining tech firms looked set to fall into foreign hands.

Micro Focus International will be snapped up off the market after agreeing a £5.1bn takeover by Canadian software firm Open Text.

Micro Focus shares soared 94.1pc, or 252p, to 519.8p.

The company, which helps businesses manage their IT systems, said the deal will create a firm with one of the biggest customer bases and widest offerings in the market.

Micro Focus chairman Greg Lock said: ‘Open Text not only shares our values but will offer new opportunities for both our customers and employees.’

The deal is expected to be completed early next year. The firm has more than 4,000 staff and 20,000 customers, with annual sales of £2.5bn and profit last year of £850m. The Berkshire firm was founded in 1976 by Brian Reynolds and Paul O’Grady, who discovered a way to allow companies to use their old systems on newer ‘micro-computers’.

It was once Britain’s biggest tech company but has struggled in recent years. The sale, after 39 years on the market, is another loss for the LSE after it emerged on Wednesday that French conglomerate Schneider Electric is mulling a bid for FTSE 100-listed Aveva.

That followed the departure of virus protection firm Avast after a £7bn merger with Nortonlifelock this year. The only major tech player in London is software giant Sage. Smaller tech firms are also under pressure with US private equity giant Thoma Bravo looking at cybersecurity firm Darktrace.

The Government has been trying to attract tech firms to the capital, and the sale also raises questions about the prospect of Cambridge-based chipmaker Arm returning to the LSE when current owner Softbank pursues an IPO. It is believed to favour a listing on New York’s Nasdaq.

The takeover continues a trend of plundering of British companies by foreign buyers sparked by the pandemic when valuations were dented.

Tech expert Russ Shaw said it raised concerns about the future of Micro Focus’s jobs, and capital investment in the UK. Shaw said the Government should scrutinise the deal under the National Security and Investment Act.

He said: ‘And at £5bn this is a big deal. The Government should make sure the proper due diligence is done to make sure it does not fall into the wrong hands.’