Hewlett Packard Enterprise Co. announced an $8.8 billion deal to spin off and merge its software operations with Britain's Micro International PLC, the latest move by the Silicon Valley giant to narrow its business focus.

Under the deal, HP Enterprise shareholders are expected to end up with Micro Focus shares currently valued at about $6.3 billion. Micro Focus will pay HP Enterprise $2.5 billion in cash.

HP Enterprise, created during the breakup last fall of Hewlett-Packard Co., sells hardware software and services to businesses. Since the deal, Chief Executive Meg Whitman has been moving to further narrow the company's focus in a series of transactions.

She said the Micro Focus deal should continue that strategy. "This is all about focusing the company on a strategy we know we can win at," Ms. Whitman said in an interview.

In earlier transactions, HP Enterprise in May completed a $2.3 billion deal in China to sell a 51% stake in a venture there called H3C that sells networking, server and storage hardware and related services. Later the same month, HP Enterprise announced a deal to spin off a computer services business that employs about 100,000 people—two-thirds of the company's total head count—and merge it with operations of Computer Sciences Corp.

The software businesses employ about 12,000 people. Once the latest transactions are closed next year, HP Enterprise's head count will have declined from about 210,000 to between 50,000 and 60,000, Ms. Whitman said.

HP Enterprise announced the transaction along with fiscal third-quarter financial results, which included a sharp jump in net income because of a $2.2 billion gain on the H3C transaction.

In all, the company reported net income for the period ended July 31 of $2.27 billion, or $1.32 a share, compared with the year-earlier figures of $320 million, or 19 cents a share. Revenue declined to $12.2 billion from $13.06 billion.

On an adjusted basis excluding one-time gains and charges, HP Enterprise put per share profit at 49 cents, compared with 45 cents in the year-earlier period. Analysts on that basis had predicted earnings per share of 44 cents on revenue of $12.64 billion.

Write to Don Clark at don.clark@wsj.com

(END) Dow Jones Newswires

September 07, 2016 16:45 ET (20:45 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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