Hewlett-Packard Enterprise to spin off assets in $8.8B deal

HPE will receive $2.5 billion as part of the deal - which continues Chief Executive Meg Whitman's strategy of focusing on data center, networking and high-end technology services - and shareholders will own 50.1 of the combined software company.

Thus, it will be retaining any and all assets related to the cloud and infrastructure business, but will spin-off assets including Application Delivery Management, Big Data, Enterprise Security, Information Management, Governance and IT Operations. "Once the ES-CSC and Software-Micro Focus transactions are complete, HPE will be a faster-growing, higher-margin and stronger free cash flow company, well positioned for the future".

Hewlett Packard Enterprise will sell off its non-core software business in what it calls an $8.8bn "spin merge" deal with UK-based Micro Focus.

Now, London-listed Micro Focus is understood to have agreed to pay more than $8bn (£6bn) for the software business of Hewlett Packard Enterprise, which split from PC-maker Hewlett Packard list year.

"I believe that the software assets that will be a part of the combined company will bring better value to our customers, employees and shareholders as part of a more focused software company", she said.

Micro Focus announced its intent to merge with HPE's Software Business Segment for approximately US$8.8 billion today. The adjusted outlook excludes an after-tax gain on the divestiture of Mphasis and other assets of Dollars 0.23, and after-tax costs of USD 0.37 per share for restructuring, separation, amortization of intangible assets, loss from equity interests, acquisition and other related charges and tax indemnification adjustments. Analysts on that basis had predicted earnings per share of 44 cents on revenue of $12.64 billion.

For the current quarter ending in October, HPE expects its per-share earnings to range from US$0.58 cents to US$0.63.

The announcement followed HPE's financial results for its third fiscal quarter of 2016, reporting a 6% drop in revenue year-on-year to $12.2 billion.

HPE late Wednesday also said fiscal Q3 non-GAAP earnings rose 9% in the three months ended July 31 to 49 cents per share, topping estimates. That compares with the average FactSet estimate of $1.88 per share. In after-hours trading, the stock changed hands at $22.11, up 2 cents.

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