It will come as Theresa May's Government prepares a new public interest test for foreign takeovers of UK-based companies, with leading politicians including Lord Myners, the former City Minister, complaining that the ARM deal should have been subject to greater scrutiny. The size of the deal - which some sources badged as a merger - is striking, and will be one of the largest overseas takeovers by a British company for several years. Its shares have risen by 60% over the last year. Since 2011, Micros Focus has produced average annual shareholder returns of 39%, a performance which has bolstered investors' favourable view of the company's management team.
#Hpe micro focus software#
The London-listed company secured approval from shareholders at its most recent annual meeting to pursue large acquisitions, having made a success of two earlier deals: the $1.2bn (£900m) takeover of business software group Attachmate in 2014 and the purchase of Serena Software earlier this year for $540m (£405m), which was partly funded through a placing with key shareholders. Micro Focus is one of Britain's biggest technology companies, and coincidentally is replacing ARM Holdings - the chip designer whose £24bn sale to Japan's Softbank was completed this week - in the FTSE-100 index. Key details of the Micro Focus deal, including the price it plans to pay for the business and how large a stake in itself would be taken by HPE, were unclear. HP's takeover of Autonomy in 2011 was one of the most disastrous takeover deals on record, led to the break-up of HP and resulted in a wave of litigation between the two sides which remains unresolved. If completed, the takeover would mean some of the assets that were formerly part of Autonomy, the British software group, being reacquired by a London-listed company.
Kevin Loosemore, executive chairman of Micro Focus, said the "time is right for consolidation in the infrastructure software market".France fishing row: PM suggests French may have breached treaty as Brexit minister 'concerned' after warning from Paris
The HPE merger would be its largest deal to date. Micro Focus, with a market capitalisation of £4.4 billion (A$7.7 billion), has been bulking up on acquisitions to boost growth earlier this year it acquired US firm Serena Software for US$540 million. It had earlier been in talks with private equity firms to sell the software unit for between US$8 billion and US$10 billion. HPE's software revenue growth has been challenged by a market shift toward cloud subscription services. 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. HP later wrote off three-quarters of the company's value, accusing Autonomy executives of financial mismanagement. HPE acquired part of its software portfolio through the US$10.3 billion purchase of Britain's Autonomy in 2011, which was meant to form the central part of the US group's move into software. With its software deal, HPE is sending one of the British firms it acquired back to where it started. HP said it would pay US$700 million in one-time costs related to the separation of the assets. Micro Focus will pay US$2.5 billion in cash to HPE, while HPE shareholders will own 50.1 percent of the combined company that will operate under the name Micro Focus and be run by its executives.
#Hpe micro focus free#
The transaction is expected to be tax free to HPE. The deal comes on the same day Dell and EMC completed their merger in a deal that unites two of HPE's biggest rivals. In the third quarter, HPE reported net revenue of US$12.2 billion, down 6 percent from US$13.1 billion a year earlier. The deal with Micro Focus was announced along with HPE's latest quarterly earnings. That system, FAST, went live in mid-November and was dogged by 'material and ongoing issues' though it is now more 'stable', the exec assured.
"With today's announcement, 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 in a statement. Micro Focus was updating its own systems but decided to use one inherited from HPE Software across the whole organisation. The move is part of HPE CEO Meg Whitman's plans to shift HPE's strategy to a few key areas such as networking, storage and technology services since the company separated last year from computer and printer maker HP Inc. Hewlett Packard Enterprise will spin off and merge its non-core software assets with Britain's Micro Focus in a deal worth US$8.8 billion (A$11.4 billion).