HPE and Micro Focus merge to create world’s seventh largest software vendor
Hewlett Packard Enterprise (HPE) announced it completed a $8.8 billion spin-off and merger with U.K. software businesses Micro Focus Friday, claiming to now be seventh-largest software vendor in the world. The companies will focus on expanding customer software investments in four key areas: DevOps, hybrid IT, security and risk management, and predictive analytics.
“Today marks a significant milestone for Micro Focus, and I am honored to be leading this team,” Chris Hsu, CEO of Micro Focus, said in a release. “We are bringing together a powerful combination of technology and talent uniquely positioned to drive customer-centered innovation at enterprise scale – enabling organizations to maximize the ROI of existing software investments while embracing the new hybrid model for enterprise IT.”
The merger was first announced in September 2016. HPE hopes selling off its management, big data and security products to Micro Focus will make them more profitable than they were with HP inc. According to some analysts, however, the success of the merger will largely be determined by the companies ability to take over the DevOps and enterprise service management market.
While business leaders anticipate applications will occupy more and more third party data centers, they do not intend to get rid of their legacy applications anytime soon, noted a recent report published by the Harvard Business Review in the release. Consequently, many enterprises are pursuing a hybrid IT approach. Among 310 business and IT executives surveyed, 63% of respondents said they were considering hybrid IT capable of supporting public clouds, private clouds and data centers. By developing enhanced hybrid IT capabilities, HPE and Micro Focus intend to gain a competitive edge in the marketplace.
“Our business strategy remains sound: bringing together software assets that deliver a high degree of value to our investors and an expansive solution portfolio to our customers so they can maximize the value of existing IT investments and adopt new technologies – essentially bridging the old and new,” said Kevin Loosemore, executive chairman of Micro Focus.
In wake of the announcement, reports emerged the deal could elicit tax penalties under 2016 tax inversion regulations, which target corporations that move their headquarters offshore in order to evade U.S. taxes. However, these penalties only apply to previous shareholders who own 60% or more of the U.S. acquired entity. Loosemore said following the merger, a spin off company would hold HPE’s software assets, making HPE shareholders own 50.1% of the company.
Moving forward, the companies intend to simplify hybrid IT with software-defined offerings that enable users to move data across private clouds, public clouds and on-premises data centers with ease. In addition, the companies plan to power the intelligent edge that supports IoT applications, and provide consumption models to change their IT environments.
