Both the FTSE 100 and the FTSE 250 are edging lower, but the mid-cap index is turning in the better performance, helped by bid speculation surrounding business software group Micro Focus.
The company's shares have jumped 27.5p to 410p - a 7% rise - as analysts reacted to yesterday's talk of a possible 600p a share offer for the business. IBM, Hewlett Packard or Microsoft have been names mentioned as predators. George O'Connor at Panmure Gordon said:
Given the ongoing sector consolidation we feel that companies will be talking to each other as a matter of course. A company like Micro Focus that is global, has more than 30 years of expertise and more than 15,000 customers including more than 70 of the Fortune Global 100 companies and one million licensed users should indeed be an interesting acquisition target. We think that there is enough in the rumour to get the shares moving hence we retain our buy and 465p price target.
We can see why Micro Focus could be attractive to IBM, HP or Microsoft even though one of Micro Focus' key differentiator is its independence enabling it be hardware as well as software agnostic. Nevertheless, these bid rumours highlight the attractiveness of Micro Focus' migration business where it has a dominant position.
