Hewlett Packard (HP)'s software business is to be purchased by Newbury-based tech firm Micro Focus in a deal worth $8.8 billion (£6.6 billion).
Micro Focus's acquisition of Hewlett Packard Enterprises (HPE) includes Autonomy – the software company that HP contentiously bought in 2011. This is the latest in a series of acquisitions that has seen Micro Focus be valued at over £5bn. The deal should see Micro Focus beome one of the largest software companies in the UK.
This is the latest good news for Micro Focus' investers after the company was promoted to the FTSE 100 in the wake of Softbank's acquisition of ARM. Since the news of this news broke, shares in Micro Focus rose by a massive 17.5 per cent.
Kevin Loosemore, Micro Focus executive chairman, said: "Today's announcement marks another significant milestone for Micro Focus and is wholly consistent with the long-term business strategy we have been pursuing to be the most disciplined global provider of infrastructure software."
While the scale of this deal is shocking, it should come as no surprise to anyone who has followed the recent downsizing of HP that has seen the tech mainstay sell off its business services division to CSC for $8.5 billion. This is the latest attempt by HP, under chief executive Meg Whitman, to refine the company's focus on its core business: computers and printers.
HP will hope that this can start a new chapter for the company after the scandal that surrounded the purchase of Autonomy. HP claimed that "accounting misrepresentations" led the company to overpay for Autonomy by about 75 per cent. What followed from that was a string of legal battles where HP sued Autonomy execs in excess of £3 billion. The legacy of the Autonomy deal will live on in infamy but by once again drastically reshaping its business, HP will look to re-energise.
While HP is attempting to recapture much of the momentum that saw it have annual revenues at over $100 billion, Micro Focus is a company that is only getting bigger and bigger. This deal will see the UK IT firm have a stock value exceeding £10 billion and it certainly shows that there are opportunities for ambitious expansion from British companies, even in light of the current uncertain economic climate.