HPE Reportedly in Talks With Investment Firm to Sell Software Unit

The company is negotiating with Thoma Bravo to sell the group, which includes Autonomy and Vertica, for as much as $10 billion.

HPE building

Hewlett Packard Enterprise officials reportedly are negotiating with investment firm Thoma Bravo to sell its software business, the latest step in an ongoing story that started earlier this summer.

According to a Reuters report citing unnamed sources, Thoma Bravo is one of several private equity firms to make bids on HPE's software assets, coming in with the highest offer—between $8 billion and $10 billion. No deal has been finalized, and the sources said Thoma Bravo may end up buying only some of the assets or none at all.

The latest report follows several others over the past few months that indicated HPE CEO Meg Whitman was interested in selling the software unit—which includes the Autonomy, Vertica and Mercury Interactive—as part of a larger effort to restructure the company to focus on such areas as data center infrastructure and the cloud.

The report also comes the same week as HPE's Big Data Conference in Boston, where company officials unveiled new features and extended cloud platform support in the latest version of the Vertica analytics software.

HPE officials continue to remake the company as it looks to thrive in an increasingly digital world driven by such trends as the cloud, data analytics, the internet of things (IoT), artificial intelligence (AI) and machine learning, virtualization and software-defined data centers. HPE was created in November 2015 when Hewlett-Packard broke in two. HPE develops enterprise IT solutions, while HP Inc. sells PCs and printers.

Since then, HPE executives in May announced plans to spin out the company's enterprise services business as a separate entity and merge it with Computer Sciences Corp. (CSC). They said the deal—which is set to be completed by March 2017—will bring in $8.5 billion to HPE and will enable the company to keep its hand in services but reduce the business costs associated with it.

Now the company reportedly is looking to move its software business, which in HPE's fiscal second quarter saw most of its year-over-year numbers decline: Revenue fell 13 percent, licensing was down 12 percent and support sales dropped 16 percent.

The Autonomy business came in 2011 when HP bought it for about $11 billion in a highly controversial deal that led to lawsuits and countersuits over the accounting practices at Autonomy in the time leading up to the acquisition. Vertica was bought that same year for its data analytics software. HP spent $4.5 billion in 2006 for Mercury Interactive and its tools for measuring the performance of customers' software.

According to the Reuters report, HPE has received offers from a number of private equity firms—including Vista Equity Partners Management, Carlyle Group and TPG Capital—for as much as $7.5 billion. The sources said that selling the entire software group to a single buyer would be made easier if the buyer already owns other tech companies. In Thoma Bravo's case, the firm has invested in or bought a number of tech companies, including Riverbed Technology, Blue Coat Systems, Compuware, DigiCert, Dynatrace and LANDesk.

Officials with HPE, Thoma Bravo and other firms have not commented on the report.