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HPE โ€“ Micro Focus Deal: Largest Takeover of a Foreign Company by a British Firm
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IN BRIEF: Hewlett-Packard Enterprise is creating a joint venture with one of Britainโ€™s largest technology business, Micro Focus International in a deal worth $8.8 billion. The spin-off from the multibillion dollar HPE - Micro Focus deal will create one of the worldโ€™s largest software companies.

HPE Micro Focus Deal

HPE โ€“ Micro Focusย Deal

The HPE โ€“ Micro Focus deal represents a rare opportunity to increase the scale of the British technology company. The spin-off will have annual revenues of over $4.5 billion. Micro Focus executive chairman, Kevin Loosemore, says the tie-up marks a significant milestone. The deal will not just create the worldโ€™s largest infrastructure software company, but also create aย significant value of both the companiesโ€™ shareholders.

The merger will give customers more choice as the spin-off will maximize the value of existing IT assets. Moreover, this will leverage their business logic and date, alongside next-gen technologies to innovate in novel ways.

With the HPE โ€“ Micro Focus tie-up, Autonomy swims back into the British land. Autonomy, formerly owned by UK software group Autonomy, was acquired by HPE as a part of its software portfolio in an $11 billion purchase. The purchase was supposed to form the nucleus of HPEโ€™s move into software. However, HPE later decided to write off the companyโ€™s value, accusing Autonomy execs of financial mismanagement. The UK tech sector will no doubt snap overwhelming overseas interest. But, not as much as it favors Hewlett-Packardโ€™s software business. For a while now, HPEโ€™s software revenue growth has been stunted by a market shift towards cloud-based services. Earlier this year, it was in talks with private equity firms with a motive to sell the software units between $8 and $10 billion.

HPE โ€“ Micro Focus Tie-up Terms

As per the terms of the deal, Micro Focus will pay $2.5 billion in cash to HPE. On the other hand, HPE shareholders will own 50.1 percent of the combined entity. The spin-off will operate under the name Micro Focus and will be run by its executives. Additionally, HPE will pay $700 million in one-time costs under the separation of the assets. The deal is expected to be tax-free.

Micro Focus, established in 1976 is headquartered in Newbury, Berkshire. It employs over 4,500 people globally across 80 locations. The UK-based technology business has around 20,000 customers across the world. It has a market capitalization of $6 billion and has been adding companies into its shopping cart to boost growth. Earlier this year, it acquired U.S company Serena Software for $540 million. The HPE โ€“ Micro Focus tie-up is its largest deal to date.

The HPE โ€“ Micro Focus deal was announced along with HPEโ€™s latest quarterly earnings. In its third quarter, HPE reports net revenue of $12.2 billion, a 6 percent decline from $13.1 billion a year earlier.

The HPE โ€“ Micro Focus deal comes on the same day Dell and EMC Corp. completed their merger deal, uniting two of HPEโ€™s biggest rivals.

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