Micro Focus’s value soared by more than £200million after the software group struck a partnership with Amazon.
Micro Focus specialises in wringing profit out of old computer systems it acquires by selling software and maintenance services to banks and retailers which use them.
But under the deal with Amazon Web Services, Micro Focus will help firms transition on to the tech giant’s cloud computing platform.
Amazon deal: Micro Focus specialises in wringing profit out of old computer systems it acquires by selling software and maintenance services to banks and retailers which use them
Lots of companies are keen to take their old archaic systems and move them online – a process that makes it easier to analyse data more effectively. It can also help remote working, which has become a much bigger priority for firms during the pandemic.
Micro Focus did not say how much the deal was worth but it has issued warrants to Amazon that would give it access to shares in the company worth £71million.
Striking any partnership with Amazon will be good for the company’s prestige, however, particularly as it will be offering a service that is in increasingly high demand.
Stock Watch – Smart Metering Systems
Smart Metering Systems rose after deals with two fast-growing – though unnamed – small energy providers.
It also announced it snapped up 15,000 devices from a group called Industrial and Commercial, for £8.3million.
And it will take over data service contracts for another 20,000 smart meters, which will generate an extra £2million each year.
Shares in the firm, which is benefiting from the drive to make homes more energy efficient, rose 7.5 per cent, or 52p, to 747p.
It also builds on recent success – coming soon after Micro Focus reinstated its dividend and said it was making ‘solid progress’ in the first year of a three-year turnaround plan.
The tie-up sent Micro Focus barrelling to the top of the FTSE 250 leaderboard, with shares rising 13.6 per cent, or 59.7p, to 498.3p, leaving the company worth £1.67billion by last night’s close.
The wider market also made gains as traders digested Chancellor Rishi Sunak’s wide-ranging Budget, which had to encompass both ongoing assistance to businesses and the economy, as well as providing an outline for the UK’s recovery.
The FTSE 100 rose 0.9 per cent, or 61.72 points, to 6675.47, while the more domestically focused FTSE 250 climbed 1.2 per cent, or 258.41 points, to 21,436.32.
The Footsie was bolstered by a rally among housebuilders after Sunak confirmed much-rumoured reports that there will be a three-month extension to the stamp duty holiday and a new 95 per cent mortgage guarantee scheme for first-time buyers.
Barratt Developments rose 7.1 per cent, or 48.4p, to 732.6p, putting it at the top of the Footsie leader board, while Taylor Wimpey gained 6 per cent, or 9.95p, to 175.85p.
Persimmon was also on the up by 6.8 per cent, or 185p, to 2895p after it vowed to return £750m to shareholders this year.
It will pay dividends worth 235p per share overall in 2021, split into three instalments, despite sales falling to £3.3billion from £3.6billion and profits tumbling to £784million from £1billion amid the pandemic.
There was surprise news on the upcoming FTSE 100 and 250 reshuffle, which calculates every three months which businesses will be included on each index.
While many were expecting holiday group Tui (up 2.5 per cent, or 10.7p, to 447.5p) to move back into the Footsie, it has instead been pipped to the post by Renishaw.
The engineering group’s stock shot higher on Tuesday after it announced it was putting itself up for sale – single-handedly giving it enough of a boost to be upgraded.
This is because FTSE Russell’s reshuffle calculations were made using companies’ closing prices on Tuesday. Renishaw fell 9 per cent, or 620p, to 6280p last night, as profit takers sold up their stock.
It will be joined by fellow engineer, Weir Group (down 1.4 per cent, or 26.5p, to 1922p), which is also being upgraded, while utility firm Pennon (down 1.1 per cent, or 10p, to 907.6p) and supermarket stalwart Morrisons (up 1.1 per cent, or 1.85p, to 171.25p), will drop to the FTSE 250.
Aston Martin revved up 6 per cent, or 115p, to 2033p after non-executive director Michael de Picciotto bought almost £1million of shares.
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