Private Equity Ponders Hewlett Packard Enterprise Buyout

Several private equity firms including KKR, Apollo Global Management and Carlyle Group are sniffing around Hewlett Packard Enterprise, contemplating a buyout of the firm, said a person who has had talks with representatives of the firms. Such a deal would be worth more than $40 billion.

A buyout would allow HPE, currently the world’s largest seller of servers and storage systems, to streamline outside the glare of public scrutiny. The server and storage businesses are under pressure from the rise of cloud computing. Many companies have stopped buying their own server and storage equipment and instead are using cloud providers like Amazon Web Services, Microsoft’s Azure and Google’s Cloud Platform. And instead of buying servers from HPE and others, AWS, Microsoft and Google buy low cost servers from Asian manufacturers.

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One of HPE’s major competitors in servers, Dell, went private in 2013 in a $24.9 billion buyout involving Michael Dell and Silver Lake Partners, and has fared well since the move. HPE, with a similar business structure, could see similar benefits by following suit.

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Any buyout would follow a series of restructurings that have reshaped what was one of Silicon Valley’s oldest tech companies, Hewlett Packard.