Hewlett Packard Enterprise (NYSE:HPE) announced on Tuesday that is has reached an agreement to acquire Simplivity, a hyperconverged infrastructure software company, for $650 million in cash.
The acquisition was a strategy to enable HPE to further the company’s stand in the growing Hybrid IT industry, through integrating Simplivity’s technology to HPE’s current infrastructure products such as the HC 250 and HC 380.
HPE President and CEO Meg Whitman stated in the company’s news release,
This transaction expands HPE’s software-defined capability and fits squarely within our strategy to make Hybrid IT simple for customers.
With the growing $2.4 billion hyperconverged market expected to grow at 25% CAGR and can reach around $6 billion by 2020, Hewlett Packard will have a better position in the market with its acquisition of Simplivity and integration of its technology into their existing products.
The transaction is expected to be completed by the second quarter of HPE’s 2017 fiscal year.
Hybrid Cloud Venture
The information tech company has recently been focusing more in improving and advancing the company’s IT strategy. HPE seeks to provide IT managers and business leaders a better, easier, and more convenient experience with a simpler
self-service portals to compose virtualized and containerized resources, and accelerate application development and deployment.
With Simplivity under the management of HPE, the combined tech of the two companies will help HPE offer
a rich set of enterprise data services across hyperconverged, 3PAR storage, composable infrastructure and multi-cloud offerings.
By the completion of the transaction, HPE hopes to be able to offer an additional range of integrated HPE Simplivity hyperconverged systems that are based on HPE’s ProLiant Servers, aside from the retained products offered individually from each company.
On November 29, HP Enterprise has entered a joint innovation with Microsoft to collaborate in hybrid cloud computing through the Microsoft (NASDAQ:MSFT) Azure. On the collaboration, Azure was appointed as the public cloud part for HPE, while HPE will provide infrastructure and services for the hybrid cloud offerings.
The partnership used both the technology of Azure and HPE’s leading infrastructure services with a goal to provide customers visibility and control over their hybrid cloud, which will help users an integrated management of infrastructure and applications.
Stock Performance
Upon the announcement of the acquisition, HPE shares experienced a quiet trading session in the market closing at $22.69 per share, only falling by 0.25%. On the previous session last January 13, HPE closed at $22.94 with a market capitalization at $38.09 billion.
As one of the leading hyperconvergence companies in the industry, Simplivity rivals against Nutanix Inc., which recently went public last year and is currently valued at around $4 billion. Even though HPE shares traded during the session mostly unchanged, Nutanix shares plunged by 0.7% at $30.05 per share, even reaching a low of $29.82 during the trading session, as it was affected by the HPE-Simplivity merger.
As seen in the image above, a trend can be expected for the upcoming sessions, and investors should regularly monitor the movement of the company’s shares as it can move higher in the near future with its announcement of innovation in the company’s Hybrid IT technology.
Conclusion
HP Enterprise share can be expected to move higher within the next few trading sessions as a bullish trend has begun to surface in its stock movement after the day’s trading session, performing better than the downward movement of its competitor, Nutanix.