September 4, 2017
Hewlett Packard Enterprise announced that it has completed the spin-off and subsequent merger of its software business with Micro Focus International plc, a global enterprise software company headquartered in Newbury, U.K.
“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.”
In the companies press release HPE’s ‘go-forward strategy’ is described as being 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 centres, 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.”
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 21 August 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 percent of Micro Focus’ ordinary shares on a fully diluted basis. This equity stake in Micro Focus is valued at approximately $6.3 billion (€5.2 billion), based on the closing price of Micro Focus ordinary shares on the London Stock Exchange as of market close on 31 August 2017.
Prior to the completion of the transaction, HPE received a $2.5 billion (€ 2.1 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 (€7.3 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 percent 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.
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