The transaction, valued at roughly $8.8 billion, would merge HPE’s non-core software assets with Micro Focus to create what HPE is calling one of the largest pure-play enterprise software vendors in the industry, with annual revenues of about $4.5 billion.
As in that deal, HPE shareholders would retain a stake in the merged company — 50.1 percent. HPE would also receive a $2.5 billion cash payment.
HPE’s press release did not estimate when the deal would close.
This would seem to create an open field for HPE to run with the last of its major business segments, which it calls the Enterprise Group. This includes servers, storage, and networking — including HPE’s network functions virtualization (NFV) efforts and the pending acquisition of SGI, a big data analytics firm.
What’s important there is that the Enterprise Group lacks the baggage of other segments. Enterprise Services, which included Hewlett-Packard Co.’s acquisition of EDS, was a consistent underperformer. And the Software segment being spun off includs Autonomy, the big data software company that HP acquired for $10.3 billion, of which HP later wrote off $8.8 billion, coincidentally enough.
(Note that the business segment named Software did not encompass all of HPE’s software.)
Separately, HPE reported third-quarter revenues of $12.2 billion and net income of $2.3 billion, or $1.32 per share, compared with year-ago revenues of $13.1 billion and net income of $200 million, or $0.13 per share.
Non-GAAP net income of $0.49 per share outdid the analysts’ consensus estimate of $0.45, according to Thomson Financial.
HPE shares were down 2 percent at $21.65 in early after-hours trading.