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Private equity circling Hewlett Packard Enterprise

HPE in the sights of private equity buyers for $40bn, according to reports

Private equity is reportedly eyeing up an acquisition of part or all of Hewlett Packard Enterprise (HPE) as CEO Meg Whitman continues her strategic review into the future of the business, which only formally demerged in November last year.

It also comes after a plan hatched by Whitman to hive off the stuttering Enterprise Services division in a complex merger with rival CSC that will create a $26bn pure-play services business once it is complete. HPE shareholders, rather than HPE itself, will own half of the new services business once that deal is complete.

Two separate reports over the weekend have indicated that private equity, which has taken a keen interest in the IT industry in recent years, is eyeing up the acquisitions of some or all of HPE.

According to financial website The Information, private equity firms KKR, Apollo Global Management and Carlyle Group might be interested in a deal to buy out the whole of HPE for around $40bn following the Enterprise Services deal with CSC.

The rationale for such a buy-out, no doubt in addition to the various executive bonuses that could be scooped up, is that HPE can continue its restructuring away from the glare of the public spotlight, and the rigours of quarterly financial reporting. Sales of hardware to enterprise have been pinched due to the shift to cloud computing, where the biggest companies tend to buy servers and parts direct from manufacturers in Asia, rather than via big systems vendors like HPE and IBM.

Early in July, meanwhile, Bloomberg suggested that HPE is looking to sell a chunk of the company's software assets - including Autonomy, Vertica and Mercury Interactive - for between $6bn and $8bn. The sum on the table may be more than half the estimated $15bn that HPE paid for the three software vendors. According to Reuters, that deal is still under consideration.

The private equity industry is flush with cash for acquisitions following the latest round of quantitative easing around the world, which is intended to inject funds into the banking system for lending to business.

High profile names selling out to private equity firms in recent years include PC vendor Dell, systems management software makers BMC Software and Compuware, and message queuing software specialist Tibco.

Private equity circling Hewlett Packard Enterprise

HPE in the sights of private equity buyers for $40bn, according to reports

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