BY Richard Summerfield
Private equity firm EQT Partners is to acquire British software company Micro Focus International’s Linux operating system SUSE enterprise software business for around $2.5bn, subject to shareholder approval and customary closing conditions.
The acquisition will be financed by the EQT VIII fund. Micro Focus will reportedly use some of the proceeds of the sale to reduce debt and may return some money to shareholders.
SUSE has been part of Micro Focus since 2014 when the company acquired The Attachmate Group for $2.35bn. At that time, SUSE represented just over a fifth of The Attachmate Group’s revenue. In the year to end April 2017, SUSE generated revenue of $303m and adjusted operating profit of $98.7m, according to Micro Focus The EQT fund is paying a multiple of 26.7 times adjusted operating profit of the unit for the 12 months to end October 2017.
“Today is an exciting day in SUSE’s history,” said Nils Brauckmann, chief executive of SUSE. “By partnering with EQT, we will become a fully independent business. The next chapter in SUSE’s development will continue, and even accelerate, the momentum generated over the last years. Together with EQT, we will benefit both from further investment opportunities and having the continuity of a leadership team focused on securing long-term profitable growth combined with a sharp focus on customer and partner success. The current leadership team has managed SUSE through a period of significant growth and now, with continued investment in technology innovation and go to market capability, will further develop SUSE’s momentum going forward.”
“We are excited to partner with SUSE’s management in this attractive growth investment opportunity,” said Johannes Reichel, partner at EQT Partners and investment advisor to EQT VIII. “We were impressed by the business’ strong performance over the last years as well as by its strong culture and heritage as a pioneer in the open source space. These characteristics correspond well to EQT’s DNA of supporting and building strong and resilient companies, and driving growth. We look forward to entering the next period of growth and innovation together with SUSE.”
“It was clear from the outset that the SUSE Business was an outstanding business with great people, great customers and fantastic products in a vibrant and dynamic market,” said Kevin Loosemore, executive chairman of Micro Focus.
SUSE believes that the sale to Swedish-based EQT will help finance the next stage in its expansion, allowing the company to hire additional software engineers.