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Thursday, 08 September 2016 08:48

Micro Focus to buy HPE arm for US$8.8b

Micro Focus executive chairman Kevin Loosemore. Micro Focus executive chairman Kevin Loosemore. Sam Varghese

British computer company Micro Focus has acquired the software arm of Hewlett Packard Enterprise in a deal estimated to be worth US$8.8 billion.

This is the third acquisition by Micro Focus since late 2014 when it bought The Attachmate Group which included Novell, SUSE Linux and NetIQ. This year, Micro Focus bought Serena Software for US$540 million.

It is the biggest buy by a tech company in the UK and is expected to close in the third quarter of 2017.

Micro Focus is valued at £4.5 billion on the London market. The company will fork out US$2.5 billion in cash and give 50.1% of its stock to HPE shareholders under the deal.

The company's executive chairman Kevin Loosemore said in a media release: "Today’s announcement marks yet another significant milestone for Micro Focus and is wholly consistent with the long-term business strategy we have been pursuing to be the most disciplined global provider of infrastructure software.

"The proposed merger with HPE Software is consistent with our recent acquisitions of Serena Software and the Attachmate Group.

"The combination of Micro Focus with HPE Software will give customers more choice as they seek to maximise the value of existing IT assets, leveraging their business logic and data along with next-generation technologies to innovate in new ways with the lowest possible risk."

HPe chief executive Meg Whitman said: "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."

The two companies have also named SUSE as HP's preferred Linux partner, using SUSE’s OpenStack expertise around HPE’s Helion OpenStack and Stackato Platform-as-a-Service solutions. The specifics of the commercial partnership are yet to be defined.

"SUSE and HPE have a long history of successful strategic partnership," said SUSE chief executive Nils Brauckmann.

"We are excited now to explore new ways of expanding upon that with a commercial partnership focused on areas such as cloud computing, software-defined networking and application platforms. The combination of SUSE’s open source expertise and OpenStack capabilities with HPE’s Helion and Stackato offerings can create best-in-class enterprise solutions for our mutual customers."

The assets that Micro Focus will acquire include what remains of British company Autonomy, a purchase made by HPE in 2011.

HPE has an ongoing fraud suit against the chief executive of the company Tom Lynch and its chief financial officer Sushovan Hussain over claims that they overvalued the company. The two deny the claims.

HPE paid US$10.3 billion to buy Autonomy, months after Oracle had turned down a suggestion to buy the company for half that amount.

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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