HP extends tender offer for Mercury

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Hewlett-Packard, the world’s second-biggest computer maker, on Monday announced a further extension of its tender offer for Mercury Interactive, a business software group that was forced to de-list its shares earlier this year because of stock options backdating.

The move marked the third time HP has extended its tender offer, which values the software maker at $4.5bn. It came in spite of news that HP had locked up more than 90 per cent of Mercury’s oustanding shares - far more than the amount needed to complete the company’s biggest acquisition since its $19bn takeover of Compaq, a rival computer maker, in 2002.

One person familiar with the matter said Mercury’s de-lisitng had complicated efforts to receive anti-trust approvals from regulators. The person said the delays were procedural and nature and were not expected to infuence the outcome of the tender offer.

HP declined to comment.

Katherine Egbert, an analyst at Jeffries & Co, said she was confident the deal was still on track. “I don’t think anyone thinks it’s at risk,” she said. “HP want to compete more with IBM, and what they’re missing is a substantial software business.”

HP’s tender offer values Mercury at $4.5bn, or $52 a share - a 33 per cent premium over the comapny’s share price the day before the deal was announced in July.

Mercury’s shares have traded on the over-the-counter market since January, when they were delisted from the Nasdaq stock market for non-compliance with filing requirements. Mercury has offered to pay $35m to settle backdating claims with the US Securities and Exchange Commission.

More than 100 companies are under investigation in the widening scandal over stock options backdating, which has recently claimed the jobs of several top executives, including William McGuire, the chief executive of UnitedHealth, one of the biggest US health insurers. Amnon Landan, Mercury’s former chief executive, and two other top managers were forced out in November 2005 because of the scandal.

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