Micro Focus buys Hewlett Packard Enterprise software assets for $8.8 billion

Micro Focus, an IT company headquartered in Newbury, Berkshire, bought Hewlett Packard Enterprise (HPE), HP’s software business, on Wednesday in a deal worth $8.8 billion (£6.6 billion), creating one of the UK’s largest software businesses by revenue, according to The Financial Times.

The sale would help HPE CEO Meg Whitman execute a plan to shift HPE’s strategy to a few key areas such as networking, storage, and technology services since the company separated past year from computer and printer makerHP Inc. On both occasions, HPE said the moves will enable it to remain more agile and focused.

The announcement is the latest in a string of acquisitions that has catapulted Micro Focus into the FTSE-100 index.

The combined company will be one of the world’s largest pure-play enterprise software companies, with annual revenues of around US$4.5 billion.

“Our newly created software-defined and cloud business will build upon key software assets like OneView and the Helion cloud platform to deliver software-defined and hybrid IT solutions like Synergy, HPE’s composable infrastructure”, she said.

HPE would contribute its software businesses in areas such as application delivery management, big data analytics and enterprise security to Micro Focus, the Palo Alto, California-based company said in a statement after U.S. markets closed. HPE expects to incur one-time after-tax costs of $700 million in the separation if it is approved by Micro Focus shareholders and regulators.

Kevin Loosemore, Executive Chairman of Micro Focus, will now spearhead the combined entity of HP Enterprise and Micro Focus.

Micro Focus International has announced that it intends to buy a stake of Hewlett Packard Enterprise’s Software Business Segement.

“Today’s announced spin-merge of our non-core software assets with Micro Focus is another important step in our strategy to unlock a faster growing, higher margin, stronger cash flow company”, said President and CEO Meg Whitman.

The former HP wrote off almost $9 billion from the acquisition of Autonomy, which it accused of fudging financial results.

HPE had been in talks with private equity firms to sell the unit for between $8 billion and $10 billion.

HP Software posted US$3.6 billion in revenue past year, with the division blaming changing technology trends for the 8% decline in earnings.