HPE to sell software division to Micro Focus for $11.5bn

HPE has announced a US$8.8 billion ($11.46 billion) deal to spin off its non-core software assets and merge them with Micro Focus.

Under the deal, Micro Focus will pay US$2.5 billion for HPE’s non-core software assets. HPE shareholders will meanwhile hold a 50.1% stake in the combined company valued at around US$6.3 billion.

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.

HPE’s non-core software assets include its application delivery management, big data, enterprise security, information management and governance and IT operations management businesses. The combined company will also focus on open source and development.

Microfocus’s executive current chairman, Kevin Loosemore, has been selected to lead the combined company.

Post separation, HPE will concentrate on its goal of becoming the industry’s top hybrid IT provider, and will retain key software assets to support this goal. HPE is also spinning off and merging its Enterprise Services business with CSC.

HPE CEO Meg Whitman emphasised that the company is not getting out of the software business altogether. “Software is still a key enabler of our go-forward strategy, but we need the right assets to win in our target markets,” she said.

“Moving forward, we will double down on the software capabilities that power and differentiate our infrastructure solutions and are critical in a cloud environment. For example, our newly created Software-Defined and Cloud business will build upon key software assets like OneView and the Helion Cloud platform.”

Image courtesy HPE.