September 13, 2011 11:47 am

HP extends £6.7bn Autonomy deadline

Hewlett-Packard has extended the deadline for its £6.7bn ($10.6bn) takeover for Autonomy after fewer than half of the UK software company’s shareholders approved the bid.

However, analysts said the deal was still on track and the delays merely reflected the large number of hedge funds who have taken positions in the company since the deal was announced. Such investors typically wait until the last possible moment before accepting a bid offer.

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In August, HP launched a takeover bid for the FTSE 100 group and asked Autonomy shareholders to rubber stamp the £25.50-a-share cash offer by September 12. At a 79 per cent premium to the £14.29 closing price of Autonomy the previous day, the deal was seen as highly advantageous to the UK software company’s shareholders.

“With Autonomy’s takeover by HP, its shareholders have been presented with a handsome reward – a 32.8 price/earnings ratio on our estimates,” said George O’Connor, an analyst at Panmure Gordon.

However, more than 48m Autonomy shares were traded on August 18, the day the deal was announced, bringing dozens of hedge funds into the shareholder register.

HP said on Tuesday that shareholders representing only 41.6 per cent of Autonomy’s equity agreed to the deal when the deadline expired, forcing the US group to extend its offer to October 3. However, it is not uncommon for an offer period to be extended two or three times as acceptances are gathered in.

“There is no real sense that the deal is falling off track. The stock price has not traded down,” said Milan Radia, analyst at Jefferies. “This is a deal that would be very difficult to disrupt because of the importance of securing the co-operation of the management.”

Autonomy’s share price edged up by 9p, or 0.3 per cent, to £25.26 on Tuesday.

The Autonomy shareholders who have approved the deal include a 9.1 per cent stake owned by the group’s directors, including 8.1 per cent held by Mike Lynch, founder and chief executive.

Mr Lynch’s stake is worth more than $800m at the takeover price, not including stock options. He will continue to lead Autonomy within HP if the deal goes ahead, reporting directly to Léo Apotheker, HP’s chief executive.

If completed, HP’s takeover of Autonomy would be the largest in Europe’s IT sector and the second-largest software deal after Symantec secured Veritas for $13.5bn in 2005.

Founded in Cambridge in 1996, Autonomy has been one of the standout successes in UK technology on the global stage – a pioneer in creating search software that can make sense of complex, unstructured information.

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