HPE Completes Micro
Focus Spin Merger
September 1, 2017
Packard Enterprise has completed the spin-off and subsequent merger of
its software business with Micro Focus.
“With the completion of this transaction, HPE has achieved a major
milestone in becoming a stronger, more focused company, purpose-built to
compete and win in today’s market,” said Meg Whitman, Chief Executive
Officer of HPE. “And, this transaction will deliver approximately $8.8
billion to HPE and its stockholders.”
Software-Defined Infrastructure Remains Core to HPE’s Strategy
HPE’s go-forward strategy is based on three key pillars: First, making
Hybrid IT simple through secure, software-defined offerings that enable
customers to move data seamlessly across their on-premises data centers,
private cloud, managed cloud and public cloud environments. Second,
powering the intelligent edge that runs campus, branch and IoT
applications. And third, providing the world-class expertise and
flexible consumption models to help customers transform their IT
Software remains core to HPE’s strategy and is embedded deeply across
its portfolio, helping customers manage, monitor and measure their
infrastructure systems. For example, HPE’s Oneview platform offers a
seamless, software-defined, hybrid IT management system. HPE’s Infosight
predictive analytics software detects and addresses performance issues
across customers’ storage systems. And Aruba has software embedded
across its networking portfolio, from policy management to data
analytics to cyber security.
Transaction Delivers $8.8 Billion in Value to HPE and its Stockholders
In the transaction, Seattle SpinCo, Inc. (“Seattle”), which holds the
software business of HPE that was spun off, merged with a wholly owned
subsidiary of Micro Focus.
With the close of the transaction, HPE stockholders received 0.13732611
American Depositary Shares of Micro Focus (“Micro Focus ADSs”) for each
share of HPE common stock held as of the record date of August 21, 2017.
Each Micro Focus ADS represents one Micro Focus ordinary share.
Immediately following the merger, HPE stockholders held approximately
222 million Micro Focus ADSs, representing 50.1% of Micro Focus’
ordinary shares on a fully diluted basis. This equity stake in Micro
Focus is valued at approximately $6.3 billion, based on the closing
price of Micro Focus ordinary shares on the London Stock Exchange as of
market close on August 31, 2017.
Prior to the completion of the transaction, HPE received a $2.5 billion
cash payment from Seattle. This cash payment, together with the equity
of Micro Focus received by HPE stockholders in the merger, implies an
enterprise value of Seattle of approximately $8.8 billion.
spin-off of Seattle is intended to qualify as a generally tax-free
transaction for U.S. federal income tax purposes.
In connection with the completion of the transaction, John Schultz,
Executive Vice President, General Counsel and Corporate Secretary of
HPE, joined the board of directors of Micro Focus. In addition, HPE is
entitled to nominate 50% of the independent directors on the Micro Focus
board until the second annual general meeting of Micro Focus
shareholders that occurs following the completion of the transaction.
As a result of the transaction, HPE will adjust its fiscal year 2017
financial outlook to reflect the partial-year contribution from Seattle,
since Seattle will no longer contribute to HPE financials going forward.
HPE will provide this update when it reports its fiscal 2017 third
quarter earnings results on Tuesday, September 5, 2017.