HP Enterprise In $8.8 Billion Deal With Micro Focus For Software Assets

Micro Focus HPEs-Plans-to-Spin-Off-Merge-Non-Core-Software-Assets-With-Micro-Focus.html" target="_blank">announced its intent to merge with HPE's Software Business Segment for approximately US$8.8 billion today.

Micro Focus is to pay $2.5bn to HPE, while HPE's shareholders will get a 50.1 per cent stake in the merged company, estimated to be worth around $6.3bn.

Hewlett Packard Enterprise (HPE) announced on Wednesday that it's offloading its non-core software assets, including its Application Delivery Management, Big Data, Enterprise Security, Information Management & Governance and IT Operations Management businesses.

Hewlett Packard Enterprise (HPE) is getting smaller.

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.

A lot of the assets HPE is selling were gained from its deal in 2011 to acquire British software firm Autonomy, which turned sour for HPE, or HP at the time, and contributed in it writing off $8.8 billion.

The software spinoff marks another step in HPE chief executive officer Meg Whitman's effort to transform the once-mighty technology conglomerate into a leaner, more efficient company catering to a few core markets that she believes will be most likely to grow in the future.

Whitman - who split HPE from sister company HP Inc in November - is looking to make HPE nimbler to woo corporate customers with more options from cloud-computing providers such as Amazon.com Inc and Microsoft Corp. After its shake-up is completed, HPE expects to have about $28 billion in annual revenue, down from $52 billion in its last fiscal year ending in October.

Earlier this year, Micro Focus acquired US firm Serena Software for $540 million. If all goes as anticipated, it should close sometime between April and October next year.

That acquisition was "calamitous" for HPE, says the FT, triggering billions of dollars in write-offs and accusations of financial misdealing by Autonomy's management - which they deny.

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. Earnings, adjusted for the gain and restructuring and other costs, were US$0.49 per share. Seven analysts surveyed by Zacks expected $12.59 billion.

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