Inside Advanced Scale Challenges|Thursday, September 21, 2017
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HPE, Micro Focus Complete Software Merger 

A year after exiting the enterprise software business to sharpen its focus on hybrid IT infrastructure for datacenters, Hewlett Packard Enterprise and Micro Focus have completed the spinoff to and merger of HPE's software assets with the U.K. pure-play software vendor.

The software spinoff is part of the U.S. company's (NYSE: HPE) restructuring strategy that shifts it away from applications to systems software used to run datacenters and bridge them to multi-cloud deployments. HPE and Micro Focus announced the $8.8 billion deal about this time last year.

In advanced of the closing announced by Micro Focus on Friday (Sept. 1), reports surfaced that the deal cloud trigger penalties under 2016 tax inversion regulations designed to crack down on the relocation of corporate headquarters to avoid U.S. taxes. The HPE-Micro Focus deal is reportedly drawing scrutiny because former shareholders who own more than 60 percent of a merged foreign company are subject to U.S. tax laws.

Kevin Loosemore, executive chairman of Micro Focus International (LSE: MCRO.L, NYSE: MFGP), dismissed concerns about tax penalties in an interview with Bloomberg Technology.

The merger makes Micro Focus, by its reckoning, the world's seventh largest pure-play software vendor. The company said Chris Hsu, formerly chief operating officer at HPE, would take the reins as CEO of Micro Focus.

The U.K. software vendor said the deal would allow it to sharpen its focus on application development tools, hybrid IT, data security and governance as well as predictive analytics.

In a statement, Hsu stressed that Micro Focus would enable enterprises to "maximize the [return on investment] of existing software investments while embracing the new hybrid model for enterprise IT."

While expanding into new markets such as predictive analytics, Loosemoore added that the software vendor's strategy concentrates on "essentially bridging the old and new."

For HPE, the spinoff also represents the end of a lengthy effort to disentangle itself from the disastrous 2011 acquisition of British enterprise software vendor Autonomy for more than $10 billion.

The company is scheduled to release its third quarter financial results on Sept. 5.

 

About the author: George Leopold

George Leopold has written about science and technology for more than 25 years, focusing on electronics and aerospace technology. He previously served as Executive Editor for Electronic Engineering Times.

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