HPE ‘In Talks’ To Offload Software Division

Hewlett Packard Enterprise (HPE) is reported to be in talks to sell off its software division, as the shakeup of the recently split firm continues.

The speculation comes after HPE confirmed in May that it spinning off its IT services business to Virginia-based CSC.

Software Sell-Off?

HPE is said to be in talks to sell its software unit to buyout firm Thoma Bravo LLC for a sum in the region between $8 billion (£6.03bn) and $10 billion (£7.54bn). This is according to Reuters, which quoted people familiar with the matter.

This is not the first time this particular rumour has surfaced. In early July Bloomberg reported that HPE was ready sell off some of its software assets in an effort to make HPE become more agile.

CEO Meg Whitman is said to be shifting the focus at HPE towards networking, storage, data centres and other related technology services.

And according to Reuters, HPE has already received offers for the software unit as much as $7.5bn (£5.6bn) in a sale process managed by investment bank Goldman Sachs Group.

Sources said that Thoma Bravo had made the highest offer for the assets among the private equity firms that held discussions with HPE, but significant discrepancies in valuation expectations persist and no deal is certain, the people said.

Other private equity firms reportedly in the running include Vista Equity Partners Management, Carlyle Group and TPG Capital. A deal with Thoma Bravo is not certain at this stage and HPE could decide to offload only some of the software assets.

HPE told TechweekEurope that it had no comment on the matter.

“As a matter of company policy, we don’t comment on rumours and speculation,” the firm said in a emailed statement.

HPE software unit includes a number of well known names in the software industry. Of course there is HP’s ill fated acquisition of Autonomy, but also a few other notable names including Mercury Interactive, Vertica and ArcSight.

Together this unit generates $3.6 billion (£2.7bn) in 2015 in annual revenues, down from $3.9 billion (£2.9bn) revenues in 2014. HPE had blamed the decline on the market shift to cloud subscriptions and it has now created a cloud division.

Thoma Bravo meanwhile owns a number of software companies, including Compuware.

All Change

HPE is in a state of change at the moment after it split off from the PC and printer business HP Inc late last year.

Earlier this month HPE bought SGI (formerly Silicon Graphics) for $275 million (£212m) in an effort to bolster its big data analytics and high-performance computing divisions.

But HPE is not the only tech firm looking to shake up its business model. Dell for example, which is in the process of buying EMC, agreed in June to sell its software division to Francisco Partners and the private equity arm of Elliott Management for more than $2bn (£1.5bn).

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