Micro Focus Snaps Up Borland, Compuware Unit

U.K. enterprise application development and management company Micro Focus International is buying storied software tools maker Borland and the testing unit of enterprise application development vendor Compuware.

Both deals are expected to be cash purchases, thanks to a new line of revolving credit. Micro Focus will pay $75 million for Borland (NASDAQ: BORL) and $80 million for Compuware’s (NASDAQ: CPWR) application testing and automated software quality (ASQ) products, it said.

The company said the two deals would put Micro Focus in leading market position in the software testing business, which it estimated to be worth around $2 billion a year and is “logically adjacent” to Micro Focus’s core application management business, it said.

“Acquiring Borland and the Compuware Testing and ASQ Business is consistent with our strategy outlined in 2006 of combining organic growth with selective acquisitions to extend our addressable market and drive further growth in both revenues and profits,” said Stephen Kelly, CEO of Micro Focus in a statement.

“Borland and the Compuware Testing and ASQ Business are complementary to each other and to the Micro Focus core business. The acquisitions will provide the enlarged group with meaningful scale in the attractive global Application Testing/ASQ market,” he added.

The boards of directors of both Borland and Micro Focus have unanimously approved their deal, which they expect to complete in late second quarter or early third quarter.

Borland has been in a struggle to survive for quite a long time. In some ways, the company was never the same after its overpriced 1992 acquisition of Ashton-Tate, the maker of dBASE IV. It attempted to expand into the application suite market, taking on Microsoft (NASDAQ: MSFT) and failing miserably.

From then on, it was a series of changes in direction and acquisitions before settling into the application lifecycle management (ALM) market. After almost a two-year effort, it sold off its franchise developer tools business, including Delphi and JBuilder, to Embarcadero Systems in 2008. Also that year, Borland relocated from Silicon Valley to Austin, Texas.

Compuware, meanwhile, is one of the healthier large companies in Detroit, with $1.2 billion in revenue. The ASQ business is a tiny part of the company, and selling it off to Micro Focus helps the it achieve some key goals, executives said.

“This move … will allow Compuware to dedicate more investments and management focus to core categories where we can be best in the world,” Bob Paul, Compuware’s president and chief operating officer, said in a statement.

For the twelve-month period ending on Dec. 31, Borland had revenues of $172 million and a loss of $204 million. In the twelve month period ended March 31, Compuware’s Testing and ASQ Business posted revenues of $74 million.

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