Financial News

The bidding battle over Borland Software (BORL - news) , the Texas-based technology group, intensified on Wednesday as the UK's Micro Focus International (LSE: MCRO.L - news) increased its bid to $1.50 a share, topping an offer from an unnamed rival bidder last week.

Micro Focus' new bid, which values Borland at $113m, is the second time the company has had to raise its offer after an initial approach at $1 per share in May.

It then raised its offer to $1.15 last month to see off a potential financial buyer, and has now increased the price again after another unnamed rival suitor made the company a non-binding offer of $1.25 a share last Thursday. Micro Focus and Borland have also increased the break-up fee on the deal to $5.2m.

Stephen Kelly, chief executive of Micro Focus, said the deal continued to meet the company's strict financial criteria for acquisitions.

"There continues to be a strong strategic rationale for this transaction and we believe that it is in the best interests of both companies, their shareholders, employees and customers," he said.

"Paying $20m or $30m more is not a lot in the context of a £800m market cap company, and the opportunity to get into the testing market is a significant one," said Will Wallis, analyst at Numis.

Micro Focus, which provides software that helps companies update legacy computer systems, is looking to expand into the fast-growing market for automated software testing. It also bought Compuware (NASDAQ: CPWR - news) , another software testing company, for $58m last month. The acquisitions would make Micro Focus the world's third biggest company in software testing, alongside IBM (NYSE: IBM - news) and HP.

Borland was once a software heavyweight and rival to Microsoft (NASDAQ: MSFT - news) , but has struggled over the past few years. It made a net loss of $216m last year.

The new $1.50 a share offer has the backing of both the Micro Focus and Borland boards. Micro Focus shareholders are due to meet on July 17 to approve the deal, while Borland shareholders will meet on July 22.

Shares in Micro Focus, which have gained more than 40 per cent in value in the past year, rose ¾p to 375¼p on Wednesday.