HP opens wallet for software acquisitions
Published: 24 Jul 2007 08:01 BST
Taking a cue from rival IBM, HP signalled on Monday that it is buying its way into the software business, offering $1.6bn for Opsware and $214m for Neoware.
Opsware, co-founded by web entrepreneur Marc Andreessen, makes software for automating data-centre administration tasks, such as sending out security patches or installing operating systems for a large number of servers.
HP offered $14.25 (£6.90) per share in cash, a 38 percent premium over the company's share price on Friday. Figuring in Opsware's existing cash and debt, the deal is valued at $1.6bn (£775m).
The company said the acquisition, following the $4.5bn purchase of Mercury Interactive one year ago, is part of HP's strategy of offering a comprehensive software line for managing corporate data centres.
"The addition of Opsware is expected to enhance HP's standing as one of the world's leading software companies and drive profitable growth for HP," Ann Livermore, executive vice president of HP's Technology Solutions Group, said in a statement.
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After the transaction, which is expected to be completed in HP's fourth quarter, Opsware chief executive Ben Horowitz will lead HP's Business Technology Optimization organisation, reporting to HP Software senior vice president Thomas Hogan.
HP also announced that it intends to buy Neoware in a cash deal. Subtracting Neoware's cash from the offer price, the deal is worth $214m (£103m), according to HP.
Neoware makes thin client and virtualisation software for centralising management of corporate desktop computers. The software will be combined into the business desktop unit of HP's PC business and will boost the company's Linux business, HP said.
The picked-up pace of software acquisitions at HP mirrors a well-worn strategy at rival IBM, which has bought 54 companies since 2003, including 36 software outfits as it decreases its dependency on hardware sales.
Buying outside companies poses both technical and corporate integration challenges. But both companies are trying to create a more comprehensive portfolio to appeal to corporate buyers and to find higher-margin product lines than hardware.
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