Micro Focus International Expands into US and merge with parts of Hewlett Packard. 
 
One of Britain’s largest technology firms is buying part of Hewlett Packard’s business.

Hewlett Packard Enterprise, HPE, is selling to and merging its non-core software assets with UKs Micro Focus International for $8.8bn.

CEO Meg Whitman is focusing HPE’s strategy on key areas, such as networking, storage and technology services following the company’s separation last year from computer and printer maker HP Inc.

“We are taking another important step in achieving the vision of creating a faster-growing, higher-margin, stronger cash-flow company well positioned for our customers and for the future,” Whitman said.

The deal with Micro Focus was announced with HPE’s latest quarterly earnings. In Q3, HPE reported net revenue of $12.2bn, down 6%.

Dell and EMC Corp are merging which unites two of HPE’s biggest rivals.

Micro Focus will pay $2.5bn to HPE, while HPE shareholders will own 50.1% of the combined company, which will operate under the name Micro Focus and be run by its executives. HP said it would pay $700m, the one off cost of separation.

HPE is sending Autonomy back to the UK. HPE acquired part of its software portfolio through the $11bn purchase of Autonomy in 2011. The takeover was supposed to form the central part of HP’s move into software.

HP later wrote off 75% of the company’s value and accused Autonomy executives of financial mismanagement.

Other HPE assets that will be merged include software for application delivery management, big data, enterprise security, information management, governance and IT operations management businesses.

HPE’s software revenue growth has been reduced by a market shift toward cloud subscription services. It had earlier been in talks with private equity firms to sell the software unit for between $8bn and $10bn.

Micro Focus, with a market capitalisation of £4.45bn, $6bn, has been making acquisitions to boost growth. This is its largest deal to date. Earlier this year, Micro Focus acquired US firm Serena Software for $540m. Kevin Loosemore, executive chairman of Micro Focus, said “the time is right for consolidation in the infrastructure software market and this proposed merger will create one of the leading players in this space.”

HPE is looking to the UK for acquisition opportunities after brexit. Valuations of UK companies has been relatively low given current exchange rates.