Dive Brief:

• Hewlett Packard Enterprise announced Wednesday plans to spin-off and merge its non-core software assets with Micro Focus. The software units include application delivery management, Big Data, enterprise security, information management & governance and IT operations management. 
• The transaction is valued at $8.8 billion. The combination of HPE's software assets with Micro Focus will create a business with annual revenues of approximately $4.5 billion.
• Though HPE is divesting a large number of assets, it still plans to remain involved in enterprise software, particularly in its software-defined and cloud business, which is in part built on OneView.  "I want to be crystal clear – HPE is not getting out of software," HPE CEO Meg Whitman wrote in a company blog post. "Software is still a key enabler of our go-forward strategy, but we need the right assets to win in our target markets."

Dive Insight:

Rumors of an HPE software spin off initially surfaced in mid July. Earlier this month, Reuters reported that HPE was in discussions with Thoma Bravo LLC to sell its software division, which made the choice of Micro Focus a surprise to many. 

Since HP's split into two companies — with Whitman at the helm — HPE has worked to streamline its core business and focus on enterprise sales. During that time, the company has made an effort to get out of slow growth areas like enterprise services. 

Now, more than ever, the company is focused on providing hybrid enterprise IT with both cloud and infrastructure solutions. But with the creation of the enterprise tech juggernaut Dell Technologies, the company faces stiff competition and could see its status as the leading provider of servers and private cloud challenged.