Hewlett Packard Enterprise (HPE) has announced plans to spin off and merge its non-core software assets in an $8.8 billion deal with Micro Focus, a multinational software company based in Newbury, UK. With this move, the US company will slim down its overall operations and shift focus to other key business operations.
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The combination of software assets include HPE’s Application Delivery Management, Big Data, Enterprise Security, Information Management & Governance and IT Operations Management businesses and Micro Focus’s complementary portfolio.
In return, HPE would get US$2.5bil in cash and its shareholders would own 50.1% of the merged company, it said.
The deal is expected to close in Q3 of 2017 with Kevin Loosemore, executive chairman of Micro Focus, taking the helm of the combined company.
The two companies have also named SUSE as HP’s preferred Linux partner, using SUSE’s OpenStack expertise around HPE’s Helion OpenStack and Stackato Platform-as-a-Service solutions. The adjusted outlook excludes an after-tax gain on the divestiture of Mphasis and other assets of Dollars 0.23, and after-tax costs of USD 0.37 per share for restructuring, separation, amortization of intangible assets, loss from equity interests, acquisition and other related charges and tax indemnification adjustments.
The deal is worth $8.8 billion and will help focus the company on key areas like networking, storage and technology services, Reuters reports. The company’s shares surged by 21 per cent following the announcement and it is expected to have annual revenues of around $4.5 billion once the deal is completed.
The deal with Micro Focus still requires antitrust approval.
After the takeover, HP wrote off about three-quarters of Autonomy’s value, claiming that “accounting misrepresentations” had led it to overpay for the firm. The company has said that software revenue growth has been challenged by a market shift toward cloud subscription services. The company has a market cap of roughly $37 billion.
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.
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Micro Focus specializes in software that works with older computer systems.
