Also with this merger, Micro Focus and HPE announced their intent to enter into a commercial partnership naming SUSE as HPE’s preferred Linux partner.
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While HPE will appoint one executive director who will be on the Micro Focus board for two years and a number of non-executives, the London-listed group dismissed the notion that HPE would be the driving force in the merged group.
Micro Focus was promoted to the FTSE 100 last week, replacing ARM after it was bought by Japan’s Softbank. Robert Youngjohns, now in charge of HPE’s software business, will become executive vice president of strategic business development and report to Whitman.
Other HPE assets that will be merged include software for application delivery management, big data, enterprise security, information management & governance and IT Operations management businesses.
Hewlett Packard Enterprise will spin off yet another part of itself, further honing the company formed as part of the breakup of Hewlett Packard last fall.
HPE will also receive a $2.5 billion cash payment prior to the completion of the merger, resulting in total consideration to HPE and its shareholders of approximately $8.8 billion.
Micro Focus, with a market capitalisation of £4.45bn ($6bn), has been bulking up on acquisitions to boost growth, and this would be its largest deal to date.
Together, HPE Software and Micro Focus will have combined annual revenues of $4.5bn (£3.37bn) and earnings (EBITDA) of $1.35bn (£1.01bn). Kevin Loosemore, executive chairman at the Newbury headquartered company, will lead the new entity, according to the Financial Times.
CEO and President Meg Whitman of HPE said that with the announcement on Thursday, HPE takes another big important step in the achieving of its vision of creating a higher-margin, faster growing, stronger cash flow business that is well positioned for customers and the future.
In earlier transactions, HP Enterprise in May completed a $2.3 billion deal in China to sell a 51% stake in a venture there called H3C that sells networking, server and storage hardware and related services.
An HPE senior executive will serve on the board of directors of the combined company.
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It recently acquired California-based Serena Software for $540 million, but the HPE software assets deal would be its largest purchase to date.
