Micro Focus, headquartered in Newbury, said the proposed deal with HPE Software is a “rare opportunity” to significantly increase Micro Focus’ scale and breadth.
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“Moving forward, we will double down on the software capabilities that power and differentiate our infrastructure solutions and are critical in a cloud environment”.
Now, HPE is turning into a shell of what it was at the time of last year’s spinoff from the PC business. Robert Youngjohns, now in charge of HPE’s software business, will become executive vice president of strategic business development and report to Whitman.
HPE’s software division generated revenues of $3.6 billion in 2015, down from $3.9 billion in 2014. The HPE shareholders would get Micro Focus shares valued at $6.3 billion, which equates to 50.1% of the merged entity.
HPE includes the assets of Autonomy, the United Kingdom software company that HP bought from entrepreneur Mike Lynch in a controversial deal in 2011.
As the company continues its operational rejigs, HP expects the merger of its non-core software business as an important step in its strategy to unlock a faster growing, higher margin, stronger cash flow company. The combined firm will be led by Kevin Loosemore, executive chairman of Micro Focus.
It is still early days since HPE was formed by splitting HP into two divisions, one focused on enterprise technology and the other, HP Inc, predominately on hardware.
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. On both occasions, HPE said the moves will enable it to remain more agile and focused.
HPE Chief Executive Meg Whitman has continued making moves to dismantle the company.
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 and Micro Focus declined to comment on the deal, which was first reported by Sky News.
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For the deal, HPE will subsidize its software business assets in areas including big data analytics, application delivery management and enterprise security to Micro Focus for $2.5 billion in cash.
