HPE signs $8.8 billion 'Spin-Merge' deal with Micro Focus

Hewlett Packard Enterprise (HPE), is selling off few of its enterprise software in what looks like a downsize. According to a company blog, by Meg Whitman, President and CEO, HPE, the company will “spin-merge” its non-core software assets with Micro Focus, a software company based in the UK, in a transaction worth $8.8 billion (approximately). Micro Focus that specializes in developing and deploying enterprise applications, will merge tech with HPE and set up a ‘pure-play software company’. While, HPE will be retaining tools that support the company’s cloud and infrastructure businesses, services built for application delivery management, big data, enterprise security, information management, governance and IT operations management will fold into the merger. Upon breaking it down further, HPE shareholders will enjoy a 50.1% ownership of the new combined company while HPE cashes on $2.5 billion, as a part of the deal. Whitman took the opportunity to comment,

“Micro Focus’ approach to managing both growing and mature software assets will ensure higher levels of investment in growth areas like big data analytics and security, while maintaining a stable platform for mission-critical software products that customers rely on.”

“Because of this, I believe that the software assets that will be a part of the combined company will bring better value to our customers, employees and shareholders as part of a more focused software company,” she added. HPE that saw a split from sister company, HP–only last November—believes that the new company will have the global footprint and financial strength to drive software innovation and also position HPE better in the Hybrid IT cloud market. However, the ftransaction is expected to complete before the end of HPE’s fiscal Q3, 2017 and is subjected customary closing conditions. The news comes after HPE agreed to spin off a 100,000-employee business of computing-related services and merge them with operations of Computer Sciences Corp (CSC), earlier in May. Recently, HPE also announced its plan to acquire SGI to boost its offerings in domains like computing, big data analytics and data management.

“I want to be crystal clear – HPE is not getting out of software. Software is still a key enabler of our go-forward strategy, but we need the right assets to win in our target markets. Moving forward, we will double down on the software capabilities that power and differentiate our infrastructure solutions and are critical in a cloud environment,” Whitman continued.

Partnership with SUSE:

In conjunction with the deal, HPE and Micro Focus also announced plans for a commercial partnership that will name SUSE, a cloud infrastructure provider, as HPE’s preferred Linux partner. The integration will bring together and offer HPE’s Helion OpenStack and Stackato solutions as Platform-as-a-Service (Paas) with SUSE’s OpenStack expertise to provide enterprise-grade hybrid cloud offerings for HPE customers. Kevin Loosemore, Executive Chairman, Micro Focuc, who will also be seen running the new joint company, stated:

“The proposed merger with HPE Software is consistent with our recent acquisitions of Serena Software and the Attachmate Group. The combination of Micro Focus with HPE Software will give customers more choice as they seek to maximize the value of existing IT assets, leveraging their business logic and data along with next-generation technologies to innovate in new ways with the lowest possible risk.”