HP Enterprise Seeks Buyer for Software Operations
September 01 2016 - 7:40PM
Dow Jones News
Hewlett Packard Enterprise Co. is seeking a buyer for its
software unit in a deal that could be valued at as much as $10
billion, a person familiar with the situation said, the latest in a
series of moves by the big-name technology vendor to narrow its
focus.
Such a transaction would, among other things, likely end the
company's association with the former operations of Autonomy Corp.,
a British software maker acquired in 2011 for $11 billion in a deal
widely regarded as a mistake.
HP Enterprise is seeking a price in the range of $8 billion and
$10 billion for the software unit, the person familiar with the
matter said. Reuters earlier reported deal talks at those values
with buyout firms that include Thoma Bravo LLC. A spokesman for
Thoma Bravo declined to comment.
The unit being offered for sale makes software to manage
business operations, this person said. The company plans to keep
software businesses associated with pieces of customers' key
technology infrastructure—such as software-defined networking.
HP Enterprise shares rose 3.2% Thursday to $22.16.
HP Enterprise, one of two companies created by the breakup last
fall of Hewlett-Packard Co., sells hardware, software and services
to businesses. Chief Executive Meg Whitman has made subsequent
moves to shrink the company, including an $8.5 billion deal in May
to spin off the company's 100,000-employee business that operates
services such as running back-office software for other companies,
and merge them with similar operations at Computer Sciences
Corp.
The former H-P took an $8.8 billion write-down on the Autonomy
deal and accused Autonomy of inflating its financial results, an
allegation disputed by Autonomy's former management. Though a
criminal probe into the matter by British authorities was dropped,
HP Enterprise and Autonomy's former chief executive are still
engaged in private litigation in the U.K.
Toni Sacconaghi, an analyst at Sanford C. Bernstein, said the
notion that HP Enterprise might want to shed the software business
isn't surprising. He estimated that the former H-P had spent around
$20 billion on software businesses, which haven't produced much
growth lately.
For the six months ended in April, HP Enterprise reported
software revenues of $1.55 billion, down nearly 12% from the
year-earlier period.
At a Bernstein event in late May, Mr. Sacconaghi asked Ms.
Whitman if she would consider an $8 billion offer for the software
business. She replied that the company would "certainly have to
look at it," according to a Thomson Reuters transcript of the
event.
Rivals such as Dell Inc. have used acquisitions to grow, and Ms.
Whitman before the breakup seemed interested in acquisitions. But
Mr. Sacconaghi said the CEO now seems more interested in moves to
generate cash that can be returned to shareholders. "It's an
interesting about-face," he said.
Write to Don Clark at don.clark@wsj.com
(END) Dow Jones Newswires
September 01, 2016 19:25 ET (23:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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