Hewlett Packard Enterprise in talks to offload software, asking for '$8bn to $10bn'

The breakup of Hewlett Packard Enterprise is set to continue with execs locked in talks to offload the software division to private equity biz Thomas Bravo. The asking price is said to be $8bn to $10bn.

The sale, reported first by Reuters, would close the curtain on one of HPE’s most embarrassing episodes, namely the overpriced buy of Autonomy, its subsequent write-down and the open, long-running legal spat with former CEO Mike Lynch.

Investment bankers at Goldman Sachs are managing the process and offers of up $7.5bn have been received so far, those oh-so-loquacious sources claimed.

A bunch of private equity firms have circled the software unit, including Vista Equity Partners Management LLC, Carlyle Group and TPG Capital but Thomas Bravo, owner of Riverbed, made the highest offer among private investors.

Talk of HPE selling the software division first surfaced in July, but there is still no certainty a deal will be finalised. HPE’s share price bounced last night by up to four per cent as word of the potential sale spread.

The unit includes Autonomy, bought for $10.3bn in 2011; Mercury Interactive, which cost $4.5bn in 2006; big data analytics platform Vertica (cost undisclosed); cyber security arm ArcSight ($1.5bn); and some IT management operations too.

Software brought in $3.6bn of revenues in fiscal ’15 ended October, this was down from the $3.9bn in the prior year. Like all software vendors, HPE has struggled to convert on-premises licensing punters to the cloud.

In the last year, chief exec Meg Whitman presided over some historic changes at HP, first spinning out the PC and printer business as a standalone entity, then getting shot of Enterprise Services to CSC.

The sale of the software division would leave HPE with group revenues of slightly less than $30bn, and the make-up of this revenue will be all based in tin - servers, storage, networking, etc.

Software and services were once deemed to represent the future of the tech industry – former HP CEO Leo Apotheker said so – but his vision, like his employment at HP, didn’t quite work to plan.

HPE provided no comment. ®