Infrastructure software company Micro Focus (MCRO) has abandoned plans to sell off parts of the business and return to cash to shareholders, a move that may scupper any hopes of a possible takeover of the whole business.

Micro Focus has effectively been in play since its latest profit warning in August 2019 sparked a strategic review of the business by the board. Many analysts felt that the rethink was a euphemism for raising the ‘for sale’ sign over the entire company.

Takeover speculation has swirled around the £2.5bn business for even longer, when reports emerged that activist investor Elliott had built a stake in the company back in April 2018. More recently Canadian enterprise management software firm OpenText had been linked to a possible buyout, while Micro Focus is still seen as a prospective target for private equity buyers.

The new strategy will see the company change its sales approach, accelerate recurring service revenues, and target product portfolio improvement, the latter likely to include bolt-on acquisitions. Executive chairman Kevin Loosemore will also end a 15 year career with the company by standing down.

‘We don’t expect OpenText, another trade or PE buyer will be making an approach until Micro Focus gets its house in order,’ says Megabuyte analyst Devun Mistry.

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