HPE Spining Off Some Software Assets; Micro Focus Involved -

Hewlett Packard Enterprise (HPE) plans to spin-off and merge its non-core software assets with Micro Focus, the company confirmed in an earnings release moments ago. HPE will receive $2.5 billion in cash as part of the deal. HPE shareholders will own 50.1 percent of the new company, a CNBC report stated. But overall, the deal is valued at $8.8 billion, HPE said.

According to HPE CEO Meg Whitman: The company is NOT getting out of the software business. Instead, it's refining focus to zero in on software-defined opportunities while also naming SUSE as its preferred Linux partner.

Whitman also said:

"Today's announced spin-merge of our non-core software assets with Micro Focus is another important step in our strategy to unlock a faster growing, higher margin, stronger cash flow company. As we said in the Enterprise Services announcement last quarter, both software and services remain key enablers of our go-forward strategy, and we are focused on building the right portfolio to win in our target markets. We believe the portfolio changes we've made over the past year are setting up HPE for long-term success while unlocking tremendous value for our shareholders."

Who Is Micro Focus?

For its part, Micro Focus already owns such classic IT brands as Attachmate, NetIQ and Novell -- not exactly a modern day powerhouse. Potential bright spots in the existing Micro Focus portfolio include SUSE Linux.

Rumors about HPE potentially selling off some or all of its software business have circulated for several months. Thoma Bravo, a private equity firm, emerged as a potential suitor last week, according to some reports.

HPE has scheduled an earnings call for 5:00 p.m. ET/2:00 p.m. PT. We'll share more updates at or before that time.