Hewlett Packard Enterprise Co. announced Wednesday afternoon that it is spinning off software assets and merging them with United Kingdom software company Micro Focus in a deal that values the assets at $8.8 billion. With this move, the US company will slim down its overall operations and shift focus to other key business operations.
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More specifically, the software assets in this deal include: HPE’s Application Delivery Management, Big Data, Enterprise Security, Information Management & Governance and IT Operations Management businesses.
HP Enterprise will receive $2.5 billion in cash, while its shareholders are expected to own 50.1 percent or about $6.3 billion of Micro Focus stock.
Microfocus’s executive current chairman, Kevin Loosemore, has been selected to lead the combined company.
The transaction is expected to be tax free to HP.
HPE expects to incur one-time post-tax separation costs of approximately $700 million, with the vast majority occurring in fiscal year 2017.
The deal includes the former United Kingdom tech company Autonomy, which HP had earlier bought in 2011.
The move is part of HPE chief executive Meg Whitman’s plans to shift HPE’s strategy to a few key areas such as networking, storage and technology services since the company separated previous year from computer and printer maker HP Inc. The firm claims the duo’s portfolios are “highly complementary” and create one of the world’s largest pure-play software companies.
Micro Focus is valued at £4.5 billion on the London market.
HPE is in the process as well of doubling down in order to deliver a new group of modern, multi-cloud software that is infrastructure as a service oriented. The deal will enable HPE to unload its Autonomy and Vertica businesses.
HPE’s decision to divest itself of its software assets will “help draw a line under a painful and litigious chapter” in its history, says the FT in reference to the USA firm’s 2011 acquisition of the United Kingdom software firm Autonomy. However, HPE later made a decision to write off the company’s value, accusing Autonomy execs of financial mismanagement.
In a press release, HPE CEO Meg Whitman stressed that the company is not getting out of the software business, rather making a pronounced pivot toward software-defined technology. And the Software segment being spun off includs Autonomy, the big data software company that HP acquired for $10.3 billion, of which HP later wrote off $8.8 billion, coincidentally enough.
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The announcement is the latest in a string of acquisitions that has catapulted Micro Focus into the FTSE-100 index.
