Hewlett Packard Enterprise Co. is seeking a buyer for its software unit in a deal that could be valued at as much as $10 billion, a person familiar with the situation said, the latest in a series of moves by the big-name technology vendor to narrow its focus.
Such a transaction would, among other things, likely end the company’s association with the former operations of Autonomy Corp., a British software maker acquired in 2011 for $11 billion in a deal widely regarded as a mistake.
HP Enterprise is seeking a price in the range of $8 billion and $10 billion for the software unit, the person familiar with the matter said. Reuters earlier reported deal talks at those values with buyout firms that include Thoma Bravo LLC. A spokesman for Thoma Bravo declined to comment.
The unit being offered for sale makes software to manage business operations, this person said. The company plans to keep software businesses associated with pieces of customers’ key technology infrastructure—such as software-defined networking.
HP Enterprise shares rose 3.2% to $22.16 in New York on Thursday.
HP Enterprise, one of two companies created by the breakup last fall of Hewlett-PackardCo., sells hardware, software and services to businesses. Chief Executive Meg Whitmanhas made subsequent moves to shrink the company, including an $8.5 billion deal in Mayto spin off the company’s 100,000-employee business that operates services such as running back-office software for other companies, and merge them with similar operations at Computer Sciences Corp.
The former H-P took an $8.8 billion write-down on the Autonomy deal and accused Autonomy of inflating its financial results, an allegation disputed by Autonomy’s former management. Though a criminal probe into the matter by British authorities was dropped, HP Enterprise and Autonomy’s former chief executive are still engaged in private litigation in the U.K.
Toni Sacconaghi, an analyst at Sanford C. Bernstein, said the notion that HP Enterprise might want to shed the software business isn’t surprising. He estimated that the former H-P had spent $20 billion on software businesses, which haven’t produced much growth lately.
For the six months ended in April, HP Enterprise reported software revenues of $1.55 billion, down nearly 12% from the year-earlier period.
At a Bernstein event in late May, Mr. Sacconaghi asked Ms. Whitman if she would consider an $8 billion offer for the software business. She replied that the company would “certainly have to look at it,” according to a Thomson Reuters transcript of the event.
Rivals such as Dell Inc. have used acquisitions to grow, and Ms. Whitman before the breakup seemed interested in acquisitions. But Mr. Sacconaghi said the CEO now seems more interested in moves to generate cash that can be returned to shareholders. “It’s an interesting about-face,” he said.
[Source:-The Wall Street Journal]
