HPE values the transaction at $8.8 billion, which includes $2.5 billion in cash paid to HPE by Micro Focus.
In addition, HPE will take 50.1% equity stake in Micro Focus, holding shares worth $6.3 billion. An HPE executive will sit on the board, and HPE will nominate half of Micro Focus’s directors.
The software businesses being spun off are Application Delivery, Big Data, Enterprise Security, Information Management & Governance, and IT Operations Management.
An HPE press release stressed that HPE isn’t getting out of the software business. It touted “key software assets” that it’s retaining, including HPE OneView, a platform to automate data center infrastructure management, including storage, compute, and networking; and HPE Helion, its hybrid cloud software.
If I’m reading the tea leaves correctly, it seems HPE is spinning off these software businesses because they lack the growth or margins that the newly refurbished HPE is looking for.
The release quotes CEO Meg Whitman as saying “…we are taking another important step in achieving the vision of creating a faster-growing, higher-margin, stronger cash flow company.”
While the spin-off takes these software businesses off HPE’s books, the company’s controlling stake in Micro Focus means HPE isn’t entirely jettisoning its connection to this software portfolio.
The news comes on the same day that Dell completed its merger/takeover of EMC. I’m positive the timing here is not coincidental. These two companies are battling to demonstrate their technological relevance to an enterprise IT market that’s transitioning to the cloud, and their financial fitness to investors and debt holders.