Hewlett Packard Enterprise To Merge Software Spinoff With Micro Focus

Hewlett Packard Enterprise Co. announced Wednesday afternoon that it is spinning off software assets and merging them with U.K. software company Micro Focus in a deal that values the assets at $8.8 billion. HPE said that the divestiture would allow it to focus solely on data-center operations with a focus on hybrid cloud and on-premises storage and computing. "We believe that the software assets that will be a part of this combination will bring better value to both our customers and shareholders as part of a more focused software company committed to growing these businesses on a stand-alone basis," Chief Executive Meg Whitman said. HPE shareholders will own 50.1% of the new combined company, which will continue to be called Micro Focus and be led by that company's CEO, Kevin Loosemore. The former Hewlett-Packard, which split into HP Inc. and HPE last year, built its enterprise software offerings through acquisitions such as the purchase of U.K. software company Autonomy, which cost more than $10 billion and led to accusations of fraud. HPE expects to incur one-time after-tax costs of $700 million in the separation if it is approved by Micro Focus shareholders and regulators. HPE, which also announced earnings Wednesday, fell 1% in late trading.