“Once the ES-CSC and Software-Micro Focus transactions are complete, HPE will be a faster-growing, higher-margin and stronger free cash flow company, well positioned for the future”, said Whitman. The deal is valued at $8.8 billion.
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HPE has had something of a bumpy ride since its split from HP’s PC and printer group a year ago, so honing its focus could be a good thing for its future.
An HPE senior executive will serve on the board of directors of the combined company.
HPE shareholders will own 50.1% of the combined company. HP said it would pay $700m in one-time costs related to the separation of the assets.
Included in this lot being offloaded are the HPE businesses that focus on big data, application delivery management, information governance and management, enterprise security and management of IT operations. The takeover was supposed to form the central part of HP’s move into software. “The use of cash will be important in determining how successfully she (Meg Whitman) has repositioned the company and created value”. At the same time, the move enables a standalone HPE to realize its vision of being the industry’s leading provider of hybrid IT.
A quick analysis suggests that Micro Focus, which provides software and consultancy services for clients updating legacy systems to more modern platforms, may even be the biggest United Kingdom software company by revenue.
HPE’s software portfolio consists largely of assets from its US$10.3 billion acquisition of Autonomy in 2011 and its US$4.5 billion acquisition of Mercury Interactive in 2006. The Firm operates through five divisions: Enterprise Group, Software, Enterprise Services, Financial Services and Corporate Investments.
The group divided in two: its enterprise unit, HPE, and the personal computer and printer business HP Inc. that became a household name but faced increasingly fierce competition.
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Separately HPE reported better-than-expected earnings in its fiscal third quarter ended July 31. The merger with HPE Software gives the company a significant boost in the infrastructure software market. As we said in the Enterprise Services announcement last quarter, both software and services remain key enablers of our go-forward strategy, and we are focused on building the right portfolio to win in our target markets.
