Partners Cheer HPE Deal To Spin Off 'Non-Core' Software Assets In $8.8B Micro Focus Merger Deal

Partners are cheering Hewlett Packard Enterprise's move to spin off and merge its "non-core" software assets, including its Autonomy and Vertica big data software and its security software portfolio, to British multinational software maker Micro Focus.

Under the terms of the deal, Palo Alto, Calif.-based HPE will spin off its big data, enterprise security, application delivery management, IT governance and IT operations management software for a 50.1 percent stake in the new company plus a $2.5 billion cash payment prior to the completion of the merger. The majority stake and the payment result in a deal valued at $8.8 billion, HPE said in a statement.

HPE said the deal creates one of the world's largest pure-play enterprise software companies, with the global strength and agility to drive software innovation across a wide array of products.

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At the same time, HPE said the deal opens the door for HPE itself to become the industry leader in hybrid IT.

Kelly Ireland, founder and CEO of Orange, Calif.-based CB Technologies, an HPE enterprise software partner, said the spin-off will provide a shot in the arm both to the software business and the sharply focused HPE software-defined infrastructure business.

"It's a great move for both HPE and Micro Focus," said Ireland. "If you are not agile and quick in this marketplace, you are not going to win. This is the best of both worlds."

HPE will be a stronger company on its own driving next-generation software-defined infrastructure sales, said Ireland. "HPE is focusing on being the top hybrid cloud infrastructure company in the world, and that is going to benefit HPE and its partners," Ireland said. "HPE has the full A-to-Z infrastructure portfolio. No one else can compete with them. They have Edgeline, Apollo, Gen9, Synergy Composable."

The HPE-Micro Focus deal comes on the same day that Dell completed its $58 billion acquisition of storage market leader EMC in the largest acquisition in IT history.

The chief technology officer of one of HPE's largest enterprise partners, who did not want to be identified, said he sees the deal giving HPE a decided advantage in the enterprise market against Dell Technologies.

"This is a huge advantage for HPE, which is going to be focused on selling core infrastructure at the same time Dell-EMC is trying to combine, going in the opposite direction," he said. "We have accounts where the customer is getting emails from both the Dell and EMC reps. It is going to take them a long time to sort this out and get sharper. This gives HPE an opportunity to sell more infrastructure."

The channel CTO said his company tried to engage with HPE on the software business but was never successful because of the "fragmented" sales structure. "It was frustrating for partners," he said.

In addition, the CTO said he believes many are underestimating the power of the HPE core infrastructure business. "The total number of workloads, whether public or private, is growing," he said. "There is more need than ever before for infrastructure. Our HPE business is up, and it is healthy."