"Non-core" product families are to be spun off and merged with United Kingdom infrastructure software firm Micro Focus in a transaction valued at approximately $8.8 billion that will see HPE shareholders get a 50.1% ownership of the new combined company. With this move, the US company will slim down its overall operations and shift focus to other key business operations.
HPE's big data, security, and IT management products - including some of its ex-Autonomy assets - will be spun out into a new company that will merge with Micro Focus. Kevin Loosemore, executive chairman at the Newbury headquartered company, will lead the new entity, according to the Financial Times.
In earlier transactions, HP Enterprise in May completed a $2.3 billion deal in China to sell a 51% stake in a venture there called H3C that sells networking, server and storage hardware and related services.
HPE expects to incur one-time post-tax separation costs of approximately $700 million, with the vast majority occurring in fiscal year 2017.
The deal includes the former United Kingdom tech company Autonomy, which HP had earlier bought in 2011.
As part of that process, Whitman previous year split HP's operations focused on selling business technology products from its personal computer and printer operations.
Hewlett Packard said the merger will "accelerate its strategy to unlock faster-growing, higher-margin and stronger free cash flow company".
Micro Focus and HPE said that the combined company planned "a commercial partnership that will name SUSE as HPE's preferred Linux partner and will bring together HPE's Helion OpenStack and Stackato solutions with SUSE's OpenStack expertise to provide best-in-class enterprise-grade hybrid cloud offerings for HPE customers". Micro Focus will pay HP Enterprise $2.5 billion in cash.
"I want to be crystal clear - HPE is not getting out of software", Whitman wrote in a blog post.
The deal is similar to HPE's divestiture of its consulting services division in May, which it merged with CSC to form the third-largest IT services business in the world. The new company will be known as Micro Focus.
United Kingdom tech firm Micro Focus is the new home for HPE's "non-core" TRIM/RM/CM, software although HPE is retaining 51% of a joint venture company formed in the $US8.8B deal.