HPE will sell off and merge its software assets – including Application Delivery Management, Big Data, Enterprise Security, Information Management and Governance and IT Operations Management businesses – with Micro Focus in a transaction valued at around $8.8bn (£6.6bn).
Advertisement
United Kingdom tech firm Micro Focus is the new home for HPE’s “non-core” TRIM/RM/CM, software although HPE is retaining 51% of a joint venture company formed in the $US8.8B deal.
The combination of the two aforementioned businesses is expected to create a a business with annual revenues of approximately $4.5 billion, alongwith a global footprint and diversified product line. The company expects full-year earnings in the range of US$1.90 to US$1.95 per share.
HPE Chief Executive Meg Whitman has working 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.
Micro Focus and HPE said that the combined company planned “a commercial partnership that will name SUSE as HPE’s preferred Linux partner and will bring together HPE’s Helion OpenStack and Stackato solutions with SUSE’s OpenStack expertise to provide best-in-class enterprise-grade hybrid cloud offerings for HPE customers”.
Key details of the Micro Focus deal, including the price it plans to pay for the business and how large a stake in itself would be taken by HPE, were unclear.
For the full year, Hewlett Packard Enterprise updated its EPS outlook to United States dollars 2.09-2.14 and the adjusted forecast to USD 1.90-1.95.
“As I’ve said many times before, we’re living in a world where continuous improvement is essential to long-term success”, noted Whitman. The new company will be overseen by Micro Focus executive chairman Kevin Loosemore.
Hewlett Packard said the merger will “accelerate its strategy to unlock faster-growing, higher-margin and stronger free cash flow company”. The move, which is expected to close in the third quarter of HPE’s fiscal 2017, will make once humble Micro Focus into a market leader.
The announcement followed HPE’s financial results for its third fiscal quarter of 2016, reporting a 6% drop in revenue year-on-year to $12.2 billion.
Advertisement
An HPE senior executive will serve on the board of directors of the combined company. Earlier this year, Micro Focus acquired US firm Serena Software for $540 million.
