HP close to securing control of Autonomy

Hewlett-Packard could win control of Autonomy this weekend or Monday, three people involved in the pending transaction have told the Financial Times.

The world’s largest maker of computers by revenue said in regulatory filings this week that it had passed the last antitrust reviews and would make its offer to buy Autonomy shares unconditional on Monday, the formal end of an offer window.

One person briefed on the progress of the deal said that the percentage of shares tendered by late on Friday in London was up substantially from the 42 per cent previously reported by HP and was very close to the 75 per cent required for the deal to go through. HP declined to comment, but one person close to the company said there were “strong signals” that it would close, although it would extend the offer if it needed to do so in order to reach the 75 per cent threshold.

If the deal does close next week, it would end a saga that contributed to the ousting of HP chief executive Léo Apotheker. On Tuesday it said Mr Apotheker would receive $7.2m in severance pay and a bonus of $2.4m.

Some shareholders had argued that Mr Apotheker had offered too much for the UK software house and felt he had gone back on previous statements that he planned no significant takeovers. HP’s offer values Autonomy at £25.50 a share, or £6.7bn ($10.6bn). The shares closed at £25.50 on Friday.

Larry Ellison, chief executive of Oracle, and a frequent critic of HP since Oracle bought rival hardware manufacturer Sun Microsystems, continued to harp on the price for Autonomy in a war of words between him and Mike Lynch, Autonomy’s chief.

This week they accused each other of lying about whether Autonomy was “shopped” to Oracle before agreeing to the HP deal.

Although Mr Lynch has borne the brunt of Mr Ellison’s assault, the Oracle chief’s real target is its increasingly bitter rival, HP, according to insiders at that company. Mr Ellison has previously lambasted the HP board for removing chief executive Mark Hurd last year. Mr Hurd is now president of Oracle.

The dispute could also raise questions for Autonomy with the London Stock Exchange, which requires listed companies to inform shareholders about any serious takeover talks.

At the source of the spat is a presentation given to Oracle management by Frank Quattrone, whose boutique Qatalyst acted as adviser both to Autonomy and to Motorola in its $12.5bn sale to Google, the year’s two biggest tech deals.

“Autonomy was shopped to us,” Mr Ellison told analysts on an Oracle earnings call last week. “We looked at the price and thought it was absurdly high.”

Mr Lynch denied this in an interview with the Wall Street Journal, saying: “If some bank happened to come with us on a list, that is nothing to do with us.”

He went on to reprise his familiar critique of Oracle’s database products, which compete with Autonomy’s “unstructured data” management software.

Oracle hit back at Mr Lynch by issuing a press release late on Wednesday night, accusing the Autonomy chief of telling “another whopper” by failing to mention his April meeting with Mr Hurd and Doug Kehring, Oracle’s head of M&A.

“Either Mr Lynch has a very poor memory or he’s lying,” Oracle said. “After listening to Mr Lynch’s PowerPoint slide sales pitch to sell Autonomy to Oracle, Mr Kehring and Mr Hurd told Mr Lynch that with a current market value of $6bn, Autonomy was already extremely overpriced.”

Mr Lynch immediately returned fire, insisting the meeting was nothing more than a “lively discussion about database technologies”.

“Frank was not engaged by Autonomy and there was no process running. The company was not for sale,” Mr Lynch said.

Oracle then took the unusual step of publishing the slides from Mr Quattrone’s presentation at Oracle.com/PleaseBuyAutonomy, which it said was made with Mr Lynch present.

“After the sales pitch was over, Oracle refused to make an offer because Autonomy’s current market value of $6bn was way too high,” Oracle reiterated.

This prompted Mr Quattrone to wade in with a new twist in the tale.

“The slides Oracle posted publicly were sent by me to Mark Hurd in January, were prepared by Qatalyst and were for the purpose of our independently pitching Autonomy as an idea to Oracle,” Mr Quattrone said. “These slides were not used in our April meeting with Mark and Doug.”

Reporting by Joseph Menn, Tim Bradshaw and Maija Palmer in London and Richard Waters in San Francisco