HPE to spin-off and merge non-core software with Micro Focus

Hewlett Packard Enterprise (HPE) has announced plans for a spin-off and merger of its non-core software assets with Micro Focus in a transaction valued at approximately $8.8 billion.

The combination of these software assets which includes HPE's Application Delivery Management, Big Data, Enterprise Security, Information Management & Governance and IT Operations Management businesses and Micro Focus' highly complementary portfolio will create one of the world's largest pure-play software companies.

The move enables Hewlett Packard Enterprise to realize its vision of being the industry's leading provider of hybrid IT, built on the secure, next-generation, software-defined infrastructure that will run customers' data centers today, bridge them to multi-cloud environments tomorrow, and enable the emerging intelligent edge that will power campus, branch and IoT applications for decades to come.

"With today's announcement, we are taking another important step in achieving the vision of creating a faster-growing, higher-margin, stronger cash flow company well positioned for our customers and for the future," said Meg Whitman, president and chief executive officer, HPE.

In addition, Hewlett Packard Enterprise and Micro Focus announced plans for a commercial partnership that will name SUSE as HPE's preferred Linux partner and will bring together HPE's Helion OpenStack and Stackato solutions with SUSE's OpenStack expertise.

With approximately $28 billion in annual revenue, the future HPE will have significant scale, a diversified, world-class portfolio and a global footprint to meet the evolving needs of its customers and partners.

HPE's newly created Software-Defined and Cloud business will build upon key software assets like HPE OneView and the Helion Cloud platform to deliver software-defined Hybrid IT solutions like Synergy - HPE's composable infrastructure offering that enables customers to operate their workloads with unprecedented speed and agility.

Wrapped around this portfolio is HPE's world-class Technology Services capability that helps customers transform their IT environment and take advantage of opportunities in emerging areas like campus, branch and industrial IoT programs.

Technology Services comprises about 22,000 service professionals and will represent approximately 25 per cent of the company's revenue after the spin-off of its Enterprise Services business and non-core software assets.

"HPE will double down on the software capabilities that power and differentiate our infrastructure solutions and are critical in a cloud environment," added Whitman.

The combination of HPE's software assets with Micro Focus is expected to create a business with annual revenues of approximately $4.5 billion. In addition, the company will have a strong go-to-market capability with nearly 4,000 salespeople worldwide, and deep R&D resources to deliver best-in-class solutions to customers and partners.

The combined company will be led by Kevin Loosemore, executive chairman of Micro Focus and Mike Phillips will serve as chief financial officer.