More HPE software sell-off rumours surface

Hewlett Packard Enterprise (HPE) is reported to be in talks to sell off its software division, as the shake-up of the recently split firm continues.

The speculation comes after HPE confirmed in May that it spinning off its IT services business to Virginia-based CSC.

HPE is said to be in talks to sell its software unit to buyout firm Thoma Bravo LLC for a sum in the region of between $8 billion (£6.03bn) and $10 billion (£7.54bn).

This is according to Reuters, which quoted people familiar with the matter.

This is not the first time this particular rumour has surfaced. In early July, Bloomberg reported that HPE was ready sell off some of its software assets in an effort to make HPE become more agile.

CEO Meg Whitman is said to be shifting the focus at HPE towards networking, storage, data centres and other related technology services.

And according to Reuters, HPE has already received offers for the software unit for as much as $7.5bn (£5.6bn) in a sale process managed by investment bank Goldman Sachs Group.

Sources said that Thoma Bravo had made the highest offer for the assets among the private equity firms that held discussions with HPE, but significant discrepancies in valuation expectations persist and no deal is certain, the people said.

Other private equity firms reportedly in the running include Vista Equity Partners Management, Carlyle Group and TPG Capital. A deal with Thoma Bravo is not certain at this stage and HPE could decide to offload only some of the software assets.

HPE said it had no comment on the matter. “As a matter of company policy, we don’t comment on rumours and speculation,” the firm said in a emailed statement.

The HPE software unit includes a number of well known names in the software industry. Of course there is HP’s ill fated acquisition of Autonomy, but also a few other notable names including Mercury Interactive, Vertica and ArcSight.

Together the unit generated $3.6 billion (£2.7bn) in 2015 in annual revenues, down from $3.9 billion (£2.9bn) revenues in 2014. HPE blamed the decline on the market shift to cloud subscriptions and it has now created a cloud division.

Thoma Bravo meanwhile owns a number of software companies, including Compuware.

Last month, HPE bought SGI (formerly Silicon Graphics) for $275 million (£212m) in an effort to bolster its big data analytics and high-performance computing divisions.

HPE is not the only tech firm looking to shake up its business model. Dell for example, which will complete its purchase of EMC next week, agreed in June to sell its software division to Francisco Partners and the private equity arm of Elliott Management for more than $2bn (£1.5bn).