HP Enterprise to spin off non-core software assets

HPE will merge non-core software assets with the United Kingdom's Micro Focus in a deal valued at $8.8 billion, both companies announced Wednesday.

Micro Focus announced in a statement this morning that it had reached a deal with Hewlett Packard Enterprises which will see the United Kingdom group acquire HPE's software business segment by merging with a wholly-owned HPE subsidiary. Micro Focus also said its SUSE unit will launch a new partnership with HPE, becoming the American firm's preferred Linux partner.

CEO and President Meg Whitman of HPE said that with the announcement on Thursday, HPE takes another big important step in the achieving of its vision of creating a higher-margin, faster growing, stronger cash flow business that is well positioned for customers and the future.

The proposed merger with HPE Software is consistent with our acquisitions of Serena Software and the Attachmate Group.

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.

Whitman said HPE will work to "double down on the software capabilities" that support the company's infrastructure platforms and play a role in cloud environments.

Shares in the Berkshire-based firm rose by 21% after the takeover was announced, according to The Guardian.

Hewlett Packard Enterprise Co (NYSE:HPE) has risen 65.22% since February 3, 2016 and is uptrending.

The new entity will be led by Micro Focus' executive chairman Kevin Loosemore.

The combined will have global reach with a diversified across product line spanning IT operations, security, information management, big data analytics, cloud, open source and development.

The Guardian quoted Neil Wilson, market analyst at ETX Capital, as commenting that the deal was a confident move by Micro Focus, swimming against the tide of United Kingdom companies being snapped up by overseas buyers.

The initial split of HP was a means to streamline the business, so further streamlining to focus on there areas where HPE sees growth would seem like a sound strategy. HP will also pay $700 million as a result of costs which cover the separation of assets.

The company reported fiscal third-quarter net income of $2.8 billion, or $1.32 a share, on revenue of $12.2 billion, down 6 percent from a year ago.

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