Shares of Hewlett-Packard Enterprise (NYSE:HPE) opened much lower today at $14.13, compared to yesterday's close of $18.06. That might appear to be quite a drop, but the price change is only due to the company completing its spinoff and merger of its software business with Micro Focus.
The $8.8 billion deal was originally announced in September 2016, as part of CEO Meg Whitman's ongoing efforts to make HPE a slimmer and more agile company. HPE received a $2.5 billion cash payment and will retain 50.1% ownership (approximately 222 million American depositary shares) of the new combined company.
The spinoff also puts an end to HPE's controversial acquisition of Autonomy in 2011, as those software assets are being included in the deal.
"With the completion of this transaction, HPE has achieved a major milestone in becoming a stronger, more focused company, purpose-built to compete and win in today's market," Whitman said in a statement. "And, this transaction will deliver approximately $8.8 billion to HPE and its stockholders."
The completion of the spinoff comes months after HPE spun off and merged its enterprise services business with Computer Sciences Corporation to form DXC Technology in April. With the software and enterprise services businesses now unloaded, HPE is better positioned to focus on its hybrid IT and software-defined infrastructure strategy.
The company will provide an update to its fiscal 2017 outlook next Tuesday, Sept. 5, 2017, when it reports earnings, as the software business will no longer contribute to financial results going forward.