HP Agrees To Acquire Autonomy For $10.3 Billion, While Considering Killing Off WebOS and Spinning Off Hardware Business

Posted Aug 19, 2011

Hewlett-Packard Company (NYSE:HPQ) has agreed to buy Autonomy Corporation plc (LON:AU) for $10.3 billion. After the acquisition is complete, HP would spin off their PC business to focus on enterprise. Autonomy shareholders would receive $42.11 per share after the acquisition. This is a 64% premium from the day before the acquisition offer. HP CEO Leo Apotheker is planning to lessen HP’s reliance on the sales of personal computers as consumer demand has increased more for Apple computers and devices. ?Their focus is on being more of a software and services company and not dependent on the hardware businesses,? stated Gartner analyst Michael Gartenberg. ?The hardware business has become a difficult business. In many ways it?s a commodity-driven business. This is a major strategic shift for HP.? Former HP CEO Carly Fiorina had acquired Compaq for $17.6 billion in 2002. Sales in HP’s current period is expected to be about $32.1-$32.5 billion. Wall Street was expecting the numbers to be closer to $34 billion. Based in Cambridge, England Autonomy will give HP software that searches through a broad range of data including e-mail, music, social network posts, video, etc. Autonomy is the second largest U.K. based software company. Some of their customers include Coca-Cola, the U.S. SEC, and Nestle. It is also rumored that HP will be abandoning mobile software that they acquired from last year’s acquisition of Palm Inc. This is due to disappointing sales of tablets and phones that run on WebOS. HP would record a one-time charge of around $1 billion in the fiscal fourth quarter related to cutting off WebOS. [Bloomberg]