An $8.8bn (£6.6bn) deal will create the UK's biggest software firm after Hewlett-Packard Enterprise (HPE) agreed to divest itself of part of its software business.
HPE's software division is to be bought by Micro Focus, a Newbury-based firm that was promoted to the FTSE 100 last week, becoming one of the UK's top 100 companies.
Micro Focus is to pay $2.5bn to HPE, while HPE's shareholders will get a 50.1 per cent stake in the merged company, estimated to be worth around $6.3bn.
The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
SUBSCRIBE & SAVE
Sign up for The Week's Free Newsletters
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Latest Videos FromThe Week
The deal is a "coup" for Micro Focus, says the Financial Times. The firm has developed from a mid-range business selling legacy software under the leadership of Kevin Loosemore, who will head up the new company.
Loosemore 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."
For HPE, says the BBC, this is part of a "dramatic downsizing" which began when the firm was split into HPE and HP Inc last year.
Chief executive Meg Whitman said: "We are taking another important step in achieving the vision of creating a faster-growing, higher-margin, stronger cash flow company well positioned for our customers and for the future."
HPE's decision to divest itself of its software assets will "help draw a line under a painful and litigious chapter" in its history, says the FT in reference to the US firm's 2011 acquisition of the UK software firm Autonomy.
That acquisition was "calamitous" for HPE, says the FT, triggering billions of dollars in write-offs and accusations of financial misdealing by Autonomy's management – which they deny.
Autonomy represents about one quarter of HPE's software division, all of which will now merge with Micro Focus.
Shares in the Berkshire-based firm rose by 21% after the takeover was announced, according to The Guardian.
