Hewlett Packard Enterprise has agreed to sell its software business to Micro Focus in a US$8.8 billion deal. This transaction will create a new entity within the software development sector. In addition, HPE’s software business will become part of an organisation that is worth approximately US$4.5 billion in revenues. It is beneficial for both companies, as it will turn Micro Focus into a market leader, through boosting its presence within the infrastructure software market.

Kevin Loosemore, Executive Chairman of Micro Focus said the merger gives “customers more choice as they seek to maximize the value of existing IT assets”.

Consequences of the merger

Mik Kersten, CEO of Tasktop Technologies commented on the merger. His company partners closely with HPE Software on tools. He believes it is a tough climate within the software community, “with the dozens of new agile and DevOps tools on the block, the competitive pressure will be high”.

He says the company will either succeed or fail, and adds that he hopes they will succeed, as “this new entity will be in a very unique position to innovate the tool chain for large-scale software delivery”.

Not all view the merger in such a positive light. Judith Hurwitz, President and CEO of Hurwitz and Associates believe the two companies do not seem matched for one another. She believes it will be difficult to merge the two. Hurwitz explains the companies have different markets and thus different consumers.

Rob Enderle, President and Principal Analyst of the Enderle Group argues that HPE Software has nowhere to go but up. He says that the business is mismanaged and required “focused leadership”.

The merger is expected to close in the third quarter of 2017.

Edited from sources by Ruby Arenson