Hewlett Packard Enterprise is seeking to put the disastrous $11bn acquisition of UK software company Autonomy behind it for good as part of a plan to shed its entire software division, according to people familiar with its plans.
The US information technology group hopes to raise $8bn-$10bn from selling the unit, one person familiar with its thinking said, in the latest stripping back of what was once the most diversified technology conglomerate.
A number of private equity groups have been approached about a possible acquisition, with at least two, Thoma Bravo and Vista Equity, still said to be pursuing a possible purchase after initial bids in the range of $7bn-$7.5bn, two people said.
Hewlett Packard Enterprise, the IT company that emerged from the split-up of Hewlett-Packard last year, has already agreed this year to spin off its services division and merge it with Computer Sciences Corp. A sale of the software division would largely complete the overhaul by Meg Whitman, chief executive officer, who first tried to hold HP together before reversing course and dismantling the group.
The purchase of Autonomy, an expert in data analytics, was meant to boost the value of HP’s IT systems to big business customers and reduce its dependence on low-margin hardware sales. However, shareholders reacted angrily that it had overpaid drastically for the British company, which reported revenues of only $870m the year before the acquisition, contributing to its then-chief executive officer being ousted.
Ms Whitman subsequently declared that a large part of Autonomy’s revenues were fraudulent and took a $8.8bn writedown on HP’s software division. Her contention was strongly denied by former Autonomy management, prompting legal claims and counterclaims between the two sides.
The former Autonomy business is part of an HPE software division that last year produced sales of $3.6bn, or 7 per cent of the group total. The division was built on a series of acquisitions, including the $4.5bn purchase of application management company Mercury Interactive, as HP tried to a broaden the usefulness of its technology to a wide range of business customers.
Under Ms Whitman’s new plan, however, HPE has been focusing more narrowly on data centre technology, and its new software aspirations are limited to the code needed to manage and orchestrate the complex systems found in the latest generation of more highly-automated data centres.
News of the planned software sale, first reported by Reuters, pushed HPE’s shares up by 3 per cent on Thursday and extended a strong run this year that has left the stock a third higher than when it was created from the split-up of HP last October.
[Source:-Financial Times]
