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HPE Completes Micro Focus Spin Merger

September 1, 2017

Hewlett 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 environments.

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.

The 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.

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