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How HPE Benefits from Its Spin-Off with Micro Focus

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Transaction valued at $8.8 billion

In September 2016, Hewlett-Packard Enterprise (HPE) announced a spin-off and merger of its non-core software assets with Micro Focus. HPE’s non-core software assets include the firm’s Application Delivery Management, Enterprise Security, Big Data, IT Operations Management Business, Information Management, and Governance businesses.

According to Hewlett-Packard Enterprise, this transaction is valued at $8.8 billion. HPE will own 50.1% of the new combined company.

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Annual revenues of $4.5 billion

Hewlett-Packard Enterprise’s (HPE) press release states that annual revenue of the new combined company will reach $4.5 billion. HPE’s CEO, Meg Whitman, noted during the company’s fiscal 3Q16 earnings call, “The company will be well diversified across product lines and geographies. It’ll also have a stronger go-to-market capability with nearly 4,000 sales people worldwide and deep R&D resources to deliver best-in-class solutions to customers and partners.”

The combined entity will be one of the largest pure-play enterprise software companies globally. Hewlett-Packard Enterprise believes this spin-off provides it with an opportunity for a 20% margin improvement in its non-core software assets three fiscal years following the close of this transaction.

Micro Focus is a UK-based global software services firm headquartered in Newbury, UK. It has over 20,000 customers and 4,000 employees with an annual revenue of ~$1.4 billion.

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