The Cloud

HPE Sells Software Assets to U.K. Firm for $8B

The deal with Micro Focus advances Hewlett Packard Enterprise's strategy of becoming a leading provider of cloud-based IT solutions.
Matthew HellerSeptember 8, 2016

Hewlett Packard Enterprise has agreed to sell most of its software businesses to Britain’s Micro Focus International for $8.8 billion, furthering its strategy of focusing on cloud-based IT solutions.

HPE has been shedding assets since it was formed last year from the split of Hewlett Packard into two companies. The deal with Micro Focus mostly involves business applications software and fits CEO Meg Whitman’s vision of becoming the leading provider of “hybrid” solutions that allow organizations to manage some IT resources in-house but use cloud services for others.

“Software is still a key enabler of our go-forward strategy, but we need the right assets to win in our target markets,” Whitman said Wednesday in a news release. “Moving forward, we will double down on the software capabilities that power and differentiate our infrastructure solutions and are critical in a cloud environment.”

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In May, HPE announced it would spin off its troubled IT services unit and merge the business with CSC in a deal worth about $8.5 billion. “With these strategic moves and our continued strong operational performance, HPE’s market cap has increased by over $10 billion, or 40%, since the separation from HP Inc.,” Whitman noted.

Micro Focus specializes in software that works with older computer systems. According to Reuters, the addition of the HPE products will catapult “the little-known British firm into the top tier of European tech companies.”

“It is the second big deal involving a British company since the June 23 Brexit vote that many feared would put the brakes on mergers,” Reuters said.

HP Enterprise on Wednesday reported revenue from its software operations declined 18% in the thirf quarter from the same period a year earlier. As The Wall Street Journal reports, the assets it is shedding include the former operations of Autonomy Corp., a British software maker acquired in 2011 for $11 billion “in a deal widely regarded as a mistake.”

With the Micro Focus and CSC deals, Whitman said, HPE “will be a faster-growing, higher-margin and stronger free cash flow company, well positioned for the future.”