MergerMArket/DealReporter
Hewlett Packard Enterprise (NYSE:HPE), the Palo Alto, California-based provider of technology services including servers, storage and networking, will look out for potential acquisitions after agreeing to merge its services business with Computer Sciences Corporation (NYSE:CSC), CEO Meg Whitman said Tuesday.
On the 2Q16 earnings call, Wells Fargo analyst Maynard Um asked if HPE expected any further transactions for its remaining business, including M&A, spinoffs or a sale. Whitman said the company’s focus going forward would be on next generation software defined infrastructure, as well as higher growth, higher margins and more robust free cash flows.
“We don’t necessarily think there is a need for acquisitions,” she said. “But if we find the right companies, we certainly will move.”
Whitman cited the previous acquisitions of 3PAR, 3Com and Aruba Networks as examples of successful deals.
“And so, we will keep our eyes out for those kinds of acquisitions,” she added. “Unfortunately there aren’t a lot of those around, but to the extent we see them, we won’t hesitate to move.”
Asked by Credit Suisse analyst Kulbinder Garcha if the company planned any further portfolio optimization actions, the CEO said HPE was happy with the performance of its overall portfolio.
“Obviously over time, we continue to ensure that we’ve got the right set of assets,” she said. “We are going to continue to optimize the set of assets that we have but we are really happy with the current portfolio.”
Tysons, Virginia-based CSC announced Tuesday its agreement to merge the company with HPE’s Enterprise Services segment. Following the deal, which is expected to close in March 2017, CSC and HPE shareholders will own approximately 50% of the new company’s shares.
In addition to the Enterprise Services division, HPE is organized into four other segments: Enterprise Group, Software, Financial Services and Corporate Investments.
In November 2015, HP (NYSE:HPQ), formerly known as Hewlett-Packard Company, spun off HPE into an independent publicly traded company.
HP bought California-based user centric networks and secure mobility solutions provider Aruba in March 2015 for around USD 2.4bn. In 2010, HP completed its acquisitions of 3PAR, a California-based provider of utility storage systems and 3Com, a Massachusetts-based provider of secure converged networking solutions, for approximately USD 2bn and USD 2.6bn, respectively.
Aside from the deal with CSC, HPE’s M&A efforts have been light since the separation from HP. In February this year, it bought Switzerland-based Trilead for an undisclosed sum.
Goldman Sachs advised HP on the HPE separation, and was also used by the latter for the merger of its Enterprise Services segment. Barclays, JPMorgan and Morgan Stanley were used for the Aruba, 3PAR and 3Com deals, respectively.
For the HPE separation, HP used Simonsen Vogt Wiig, Baker & McKenzie, Freshfields Bruckhaus Deringer and Skadden Arps Slate Meagher & Flom. The latter three were used by HP on multiple earlier buys, according to the Mergermarket M&A database.
On Tuesday’s call, HPE reported total gross cash and debt in 2Q16 of USD 9.3bn and USD 16.1bn, respectively. The company has a market capitalization of USD 27.9bn.