So, who is Micro Focus and why is it the right partner for HPE Software?

Since the announcement of the planned spin merge of HPE Software with Micro Focus, many customers have asked me a simple question: “Out of all the software companies out there, why did you select Micro Focus as your spin merge partner?”

Well, it’s actually a pretty easy question to answer—and it comes down to two things:  experience and performance.

Micro Focus was founded over 40 years ago with a focus on COBOL. If you thought COBOL was a thing of the past, you might be surprised to learn that the COBOL business has tripled in size since 2001. In fact, in the first half of last year, COBOL grew at 14% YOY. This was driven by innovation with Visual Cobol, which allows customers to move legacy workloads on to modern deployment models such as cloud and mobile.

On the other side, HPE Software made its debut 30 years ago with Data Protector and Network Management, products that are still core to us today and where we are still innovating. Both HPE Software and Micro Focus have grown through organic innovation and a series of acquisitions—have a look at just a few of these key acquisitions below:

It’s impressive to see that combined, these two companies have 70 years of heritage in the software industry, bringing with it a wealth of experience and knowledge. With the planned merger, we will come together to form an acquisitive and innovative company that our customers and partners can invest in for the long term with confidence.

The other element critical to our approach historical performance. Micro Focus has had an incredible track record of financial performance. In 2011, when Kevin Loosemore took over as Executive Chairman, the company was $400M in revenue and $834M in market cap. Since then, the company has executed on a series of acquisitions and organic innovations, creating a company worth $1.4B in revenue and $6.7B in market cap—that’s a 704% increase in market cap in six years!

If you look at these numbers relative to other top tech companies, Micro Focus has outperformed companies including Amazon, Facebook and Microsoft.

This is important to know, because people want to invest in a company that is delivering consistent financial performance and is set up for longevity. The strong performance of Micro Focus combined with the scale of HPE Software will provide increased access to the capital markets, both debt and equity, and will allow us to invest where it matters most for our customers while maintaining stability for our internal teams.

So, we have covered experience and performance, the next logical question I often get asked is, “Why does this matter? or “What does this mean for me?”

 

 

Upon close of the planned spin-merge, the new, combined company will be the 7th largest pure-play software company in the world and will sit amongst some of the most dominant software players in the industry. But what excites me the most is not the list of companies to the left of the #7 position in the chart below but rather all of the companies to the right—and of course the many companies not even listed here. This is an industry that is ripe for continued consolidation and we expect to be in a great position to take the helm.

Experience, performance and longevity are all keys to why I believe Micro Focus is the right partner for HPE Software – together we will have the global scale needed to best serve our customers and partners.  So let me wrap it up with the top 3 reasons I am personally excited about this pending merger with Micro Focus.

1. HPE Software will become a pure software company. From a $3.1B software business inside of a $100B hardware company, to an independent, software-focused company with estimated annual revenues of $4.5 billion, 18,000 employees, and 40,000 customers, the new combined company is expected to become the largest tech company on the UK FTSE and the second largest software company in Europe.
2. We expect the combined portfolio will have real breadth and depth to help solve more customers’ challenges across key areas such as DevOps, Hybrid IT, Security and Risk and Predictive Analytics, from mainframe to mobile.
3. We intend to build a strong operational foundation that will bring the best of both companies to the forefront. When you prepare for a global merger of this scale, it gives each company an unprecedented opportunity to look at all of their processes and take steps to We have had the luxury of stepping back and asking “How do we transform our IT platform to support our strategy for tomorrow?” Few of us ever get this opportunity. Once the transformation is complete it will be truly industry leading.

As I said in my last post, our mission is to provide our customers with a best-in-class portfolio of enterprise-grade scalable software with analytics built in. We put customers at the center of our innovation and build products that our teams can be proud of. This mission is simple but powerful and is absolutely at the center of all we do as we help our customers and partners Discover the New—across our company, portfolio and innovations.

 

With less than two months until the expected close of the spin-merge, the countdown is on! Be sure to check in here for more updates as we continue down the road to close!