Hewlett Packard Enterprise announced that it has completed the spin-off and subsequent merger of its software business with Micro Focus International plc, a leading 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 transaction, Seattle SpinCo, Inc. ("Seattle"), which holds the software business of HPE that was spun off, merged with a wholly owned subsidiary of Micro Focus.
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 August 21, 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% of Micro Focus' ordinary shares on a fully diluted basis. This equity stake in Micro Focus is valued at approximately $6.3 billion, based on the closing price of Micro Focus ordinary shares on the London Stock Exchange as of market close on August 31, 2017.
Prior to the completion of the transaction, HPE received a $2.5 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.
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% 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.
HPE to Update Financial Outlook on Tuesday, September 5th
As a result of the transaction, HPE will adjust its fiscal year 2017 financial outlook to reflect the partial-year contribution from Seattle, since Seattle will no longer contribute to HPE financials going forward. HPE will provide this update when it reports its fiscal 2017 third quarter earnings results on Tuesday, September 5, 2017.
