Hewlett Packard Enterprise (HPE) is in talks with buyout firm Thoma Bravo to sell its software division, hoping it can fetch between $8 billion and $10 billion, according to Reuters. The potential software asset sale would reinforce CEO Meg Whitman's focus on next-generation data center infrastructure.
> Updated Sept. 7, 2016: HPE Confirms Software Spin-Off Plan.
HPE has received offers for the software unit of as much as $7.5 billion in a sale process managed by investment bank Goldman Sachs Group Inc, Reuters reported. The leak may suggest that HPE is seeking to hammer out a deal over the three-day holiday weekend, and perhaps announce a formalized agreement by Tuesday, Sept. 6, sources tell ChannelE2E.
HPE has explored the potential sale of its software assets since at least July 2016. Those assets potentially include Autonomy, Mercury Interactive and Vertica Systems. Several investment firms -- including KKR & Co LP, Apollo Global Management LLC and Carlyle Group LP -- apparently have given HPE's software assets a look in recent months.
HPE Software Bidder: Who Is Thoma Bravo?
Thoma Bravo was not mentioned in those early rumors but apparently came to the negotiating table in recent weeks, sources tell ChannelE2E.
Thoma Bravo is widely respected in private equity circles and in Silicon Valley. Among the firm's recent moves:
- Investing heavily in LANDesk to rebuild that company's reputation in the IT management market, while pushing toward apps and mobile.
- Thoma Bravo also is one of SolarWinds' current owners -- a relationship that played a key role in SolarWinds' recent buyout of LogicNow.
HPE Software: Big Acquisitions, Little ROI
While HPE's overall business has improved dramatically, the software unit has been an under-performer. HPE has spent heavily over the years to get into the software market, including such acquisitions as:
- Autonomy, which HPE acquired for $10.3 billion in 2011 — though HP ultimately wrote down nearly $9 billion associated with the deal.
- Mercury, which the company acquired for $4.5 billion in 2006.
- Vertica, which the company acquired for $350 million in 2011.
Still, the software group has struggled to grow amid the shift from traditional software licenses toward cloud- and SaaS-based subscription services.
HPE is set to host a global partner conference in September, 2016.
