Uncertainty surrounds the Borland name, after Micro Focus said it was too early to say whether the famous name would survive, if its acquisition of the former IDE player goes ahead.
Micro Focus, a British-based provider of enterprise application management and modernisation software, announced on Wednesday that it was acquiring Borland Software in a cash deal worth £50 million ($75 million). At the same time, it also said it was acquiring the application testing and automated software quality division of Compuware for £53 million ($80 million).
"Borland has undergone a lot of changes over the years," said Stuart McGill, Chief Technology Officer of Micro Focus. "In the past it was competing against the likes of Microsoft in the IDE (integrated development environment) space. But they have changed and disposed of their Codegear business (its development tools unit that published JBuilder) last year."
This left Borland to concentrate on its Application Lifecycle Management (ALM) business, but in truth the company has been struggling for a number of years now. Last year it recorded a net loss of $216 million on sales of just $172 million. In December it announced it was axing 15 percent (or 118 staff) of its total workforce of 879 employees, and in January it lost its CEO Tod Nielsen to VMware.
The Compuware division was on the other hand profitable, recording $5 million in profit last year on sales of $74 million.
Despite Borland's financial woes, McGill told Techworld that Borland would form a key part of Micro Focus's strategy to concentrate on enterprise applications. "We have solidly positioned our company in the enterprise space," McGill said.
"We have been developing a broad enterprise application business, and therefore Borland's ALM business, as well as Compuware's testing and automated software quality (ASQ) division, are complimentary," he said.
"For existing Micro Focus customers, the deals make absolute sense," he added. "It gives us a more complete solution in the market-place."
McGill also insisted that there was no overlap with Micro Focus's product set. "It is a logical deal as it fits into everything we are planning for," he said. It will give us greater access to larger number of customers, taking our business forward."
Indeed, there is little doubt that buying Borland and the Compuware unit will allow Micro Focus to address a broader market, particularly in the United States.
McGill confirmed that Micro Focus would be taking on all of the remaining Borland employees, as well as the people from the testing and ASQ division of Compuware. So does he envisage any redundancies?
"We are still going through our integration plans and have no update on that," he told Techworld. "However, there are synergies in the back office, but we value the skills we have acquired and are looking to use those as we move into a new market space."
At the end of December Borland had 579 staff engaged in selling, general and administrative functions, and 300 were engaged in research and development. Presumably, the R&D staff will be reasonably safe, so it remains to be seen how many heads will role among Borland's 579 back-office workforce.
And what of the Borland name itself? Will it survive the acquisition? "It is too early to say," said McGill. "We have to close the transaction first." He could also not confirm whether Borland or the Compuware division would continue as separate entities, or whether Micro Focus expected any shareholder or regulator opposition to the deals.
He thinks the Borland deal could close in about 8 weeks or so, depending on the go ahead from shareholders and the regulator. "Compuware will close a little earlier," he said. "Hopefully it will all be completed by the end of our first quarter (end of July)."
"It is an exciting day for us," said McGill. "We are hoping to bring something new to the table. Our core strength has been our business success, which has given us the financial strength to make these acquisitions."
Certainly, it relatively unusual in the IT space for a British company to be buying two American companies. "Although we are a UK company, we play in a global market place," he said. "If you don't, it becomes impossible to do the things that we have announced today. But if you do the right things, you can be successful on the worldwide stage. Right now, we are concentrating on closing the acquisition, integration, and making it a success."
Find your next job with techworld jobs