Why the ‘Spin-Merge’ of HPE’s Enterprise Services with CSC is the Right Next Step

May 24, 2016 | By Meg Whitman, President & CEO of Hewlett Packard Enterprise

When we launched Hewlett Packard Enterprise, we talked about the value of being a smaller, more focused and agile company. In our first two quarters, we've delivered strong results, brought compelling new innovations to market, and strengthened how we deliver to our customers and partners. Now, we are making a major move that will further accelerate the business.

 

Today, HPE announced plans to spin off and merge our Enterprise Services business with CSC. This deal is very exciting because it does two things: it creates a new pure-play global IT services powerhouse, and it unlocks HPE to be more competitive, with faster growth, higher margins and stronger free cash flow.

 

The Best of CSC and HPE’s Enterprise Services

 

By combining CSC with HPE's Enterprise Services, we’re creating a new company with greater agility, focus, and the ability to drive faster outcomes for customers. It will offer world-class strength in customer service and IT operations, market-leading industry and technology expertise, global scale, and best-in-class offerings.

 

The new company, with $26 billion in expected annual revenue, takes the best of CSC and HPE's Enterprise Services to create a winning combination of CSC’s deep turnaround expertise and transformation capabilities, plus the strong customer relationships and industry experience of HPE's Enterprise Services.

 

With this bold announcement, we will create two strong, closely aligned companies with the vision, focus and execution needed to thrive in this time of digital transformation.

A Focused HPE

 

I'm also excited about this deal because it allows the future HPE to further sharpen our leadership and build the vital end-to-end infrastructure solutions needed to power the cloud and mobility revolutions. Our goal is to provide secure hybrid IT and campus mobility solutions that accelerate our customers' digital transformation journey.

 

The standalone HPE, with $33 billion in expected annual revenue, will focus on secure, next generation, software-defined infrastructure that leverages a world-class portfolio of servers, storage, networking, converged infrastructure, as well as our Helion Cloud platform and software assets. Beyond the data center, HPE is redefining IT at the edge with its next generation of Aruba and computing products for campus, branch and Internet of Things applications.

 

Why Now?

 

This is the right next step for both companies and our customers. I'm so proud of the progress our Enterprise Services business has made over the last few years, which makes this market-defining merger possible. With today's announcement we are setting up both HPE and the new company to win in each of our respective markets.

 

Ensuring Continuity

 

We expect the merger of HPE's Enterprise Services and CSC to be complete by March 31, 2017. With the separation, HPE proved that we could undertake massive change at an incredible scale while continuing to deliver for our customers. This will be no different. Through every step of the process, and after the transaction closes, we will take steps to ensure continuity for our customers, partners and employees.

 

Mike Lawrie, the current head of CSC, will become chairman, president and CEO of the new company. Mike Nefkens, the current EVP and GM of HPE's Enterprise Services, will be a key part of the new company’s executive team, working closely with Mike Lawrie. In addition, I will serve on the new company’s Board of Directors, which will be split 50/50 between directors nominated by HPE and CSC. 

 

And I want to add that our customers can rest assured—we will deliver on the commitments we've made. We will create long-term agreements between the new company and HPE to meet our current commitments, while growing new business opportunities over time. In fact, HPE will be one of the new company’s largest customers.

 

A Bright Future

 

It’s amazing how far we've come over the last five years, and I’m excited about the bright futures of both organizations. With this bold announcement, we will create two strong, closely aligned companies with the vision, focus and execution needed to thrive in this time of digital transformation.

 

Read the press release for more information and forward-looking statements here.