Report: Private Equity Firms Eyeing HPE Buyout

Prominent private equity giants, including Carlyle Group, KKR and Apollo Management Group, are contemplating a buyout of Hewlett Packard Enterprise, according to a report from investigative website The Information.

The report sent HPE shares up 3.5 percent, or 71 cents, Friday to $21.02.

[Related: CRN Exclusive: Whitman On Why Dropbox Hit The High-Price AWS Wall, HPE's Lower-Cost Hybrid Cloud, The Docker Partnership And Why IBM Watson Is Second Best]

HPE, Palo Alto, Calif., would not comment on the report.

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A private equity deal would be worth more than $40 billion, according to The Information.

Reuters, meanwhile, reported that the private equity interest is focused on acquiring "some software assets" worth between $6 billion and $8 billion rather than the entire company.

"Private equity firms have a lot of cash on hand and HPE has cleaned house and really gotten its act together compared with five years ago when [HPE CEO] Meg Whitman took over," said Dan Molina, CTO of San Diego-based Nth Generation Computing, one of HPE's top enterprise partners."HPE is more innovative, nimble and would be an attractive target for private equity."

HPE has a lot of innovative technology that would be appealing to private equity including The Machine -- a breakthrough new computing architecture – that is on track to be released as a prototype by the end of the year, said Molina. "There is tremendous potential upside with The Machine," he said. "HPE continues to be one of the leaders in infrastructure."

One source close to HPE said that the company is considering selling off software assets, specifically Vertica and Autonomy. "Big data is clearly its own separate business," said the source.

The source said one of the key players driving the software divestment is HPE COO Chris Hsu, a former KKR managing director who joined HPE two years ago. "Chris is looking at different pieces of the business including the software business," said the source.

At the same time, HPE has become much more aggressive as an investor in hot emerging technology startups, the source said. "HPE is putting a lot of money into venture capital and small startups, acting almost like a technology holding company," the source said.