Micro Focus spends $540m to add Serena its software brand museum

Brit biz finds another mainframe software base to milk

Micro Focus International is splashing out $540m to scoop up Serena Software – or more specifically, its recurring maintenance revenues, to add to its stable of once great, now slightly dusty software brands.

LSE-listed mainframe specialist Micro Focus is simultaneously raising $216m in a placing to help pay for the deal, together with existing cash and its credit facility which has been jacked up from $225m to $325m. It will cover Serena’s debts of around $252m, paying the rest in cash, valuing the firm at $540m in total.

Serena Software sells application lifecycle management tech for mainframes and distributed systems. Curiously, it is based in Silicon Valley but managed from Oregon and St Albans. Unaudited figures for the year to 31 January show it has revenues of $162m and operating EBITDA of $80m. This was down on the previous year’s $176.2m revenues and $87.7m EBITDA.

More to the point, as Micro Focus puts it, Serena’s customers are “typically highly regulated large enterprises, across a variety of sectors including banking, insurance, telco, manufacturing and retail, healthcare and government.”

Micro Focus said that like itself, Serena “benefits from high levels of recurring maintenance revenues and high EBITDA margins, with consistently strong cash generation and no significant customer concentration.”

The 2015 figures showed license and maintenance revenue accounting for 19 per cent and 73 per cent of its revenues, the balance being made up of revenue from providing professional services.

The only brake on the deal is securing competition approval in the US and Germany, but Micro Focus reckons Serena's “position in the Source Code Change Management (SCCM) segment complements the Micro Focus product portfolio in COBOL Development, Host Connectivity, and CORBA.”

All of which might be considered deeply unsexy areas for the young blades of today’s software industry. But with crusty old mainframes and Unix systems underpinning many of the systems of record which banks and the like are obliged to maintain, it's an area that will be delivering revenues for some time to come – and to a shrinking pool of suppliers, by the looks of things.

That maintenance obligation is regularly highlighted when the financial system is brought to a shuddering halt because a mainframe batch operation has gone awry somewhere.

Hence Micro Focus’ steady accumulation of “oh I remember them” software houses, including Attachmate in 2014, a deal which also brought it Novell and Suse Linux. It snaffled Borland back in 2009. ®

Narrower topics

Other stories you might like

  • Experts: AI should be recognized as inventors in patent law
    Plus: Police release deepfake of murdered teen in cold case, and more

    In-brief Governments around the world should pass intellectual property laws that grant rights to AI systems, two academics at the University of New South Wales in Australia argued.

    Alexandra George, and Toby Walsh, professors of law and AI, respectively, believe failing to recognize machines as inventors could have long-lasting impacts on economies and societies. 

    "If courts and governments decide that AI-made inventions cannot be patented, the implications could be huge," they wrote in a comment article published in Nature. "Funders and businesses would be less incentivized to pursue useful research using AI inventors when a return on their investment could be limited. Society could miss out on the development of worthwhile and life-saving inventions."

    Continue reading
  • Declassified and released: More secret files on US govt's emergency doomsday powers
    Nuke incoming? Quick break out the plans for rationing, censorship, property seizures, and more

    More papers describing the orders and messages the US President can issue in the event of apocalyptic crises, such as a devastating nuclear attack, have been declassified and released for all to see.

    These government files are part of a larger collection of records that discuss the nature, reach, and use of secret Presidential Emergency Action Documents: these are executive orders, announcements, and statements to Congress that are all ready to sign and send out as soon as a doomsday scenario occurs. PEADs are supposed to give America's commander-in-chief immediate extraordinary powers to overcome extraordinary events.

    PEADs have never been declassified or revealed before. They remain hush-hush, and their exact details are not publicly known.

    Continue reading
  • Stolen university credentials up for sale by Russian crooks, FBI warns
    Forget dark-web souks, thousands of these are already being traded on public bazaars

    Russian crooks are selling network credentials and virtual private network access for a "multitude" of US universities and colleges on criminal marketplaces, according to the FBI.

    According to a warning issued on Thursday, these stolen credentials sell for thousands of dollars on both dark web and public internet forums, and could lead to subsequent cyberattacks against individual employees or the schools themselves.

    "The exposure of usernames and passwords can lead to brute force credential stuffing computer network attacks, whereby attackers attempt logins across various internet sites or exploit them for subsequent cyber attacks as criminal actors take advantage of users recycling the same credentials across multiple accounts, internet sites, and services," the Feds' alert [PDF] said.

    Continue reading

Biting the hand that feeds IT © 1998–2022