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HP to Acquire Autonomy

Hewlett Packard, a global leading provider of hardware, software, and services, recently announced that it is acquiring Autonomy, an enterprise information management software provider. HP will acquire autonomy for $42.11 per share or about $10.3 billion. This represents a premium of about 64 percent over the closing stock price. HP expects the acquisition to be completed by the end of 2011.

The Autonomy acquisition will help bolster HP’s efforts in the data mining and analytics space.

Leo Apotheker, HP’s CEO and president, commented on the way Autonomy will strengthen HP in the enterprise information segment:

“Autonomy presents an opportunity to accelerate our strategic vision to decisively and profitably lead a large and growing space. Autonomy brings to HP higher value business solutions that will help customers manage the explosion of information. Together with Autonomy, we plan to reinvent how both unstructured and structured data is processed, analyzed, optimized, automated and protected. Autonomy has an attractive business model, including a strong cloud based solution set, which is aligned with HP’s efforts to improve our portfolio mix. We believe this bold action will squarely position HP in software and information to create the next-generation Information Platform, and thereby, create significant value for our shareholders.”

Dr. Mike Lynch, Autonomy’s CEO and founder, was excited about the future prospects for the combined companies:

“This is a momentous day in Autonomy’s history. From our foundation in 1996, we have been driven by one shared vision: to fundamentally change the IT industry by revolutionizing the way people interact with information. HP shares this vision and provides Autonomy with the platform to bring our world-leading technology and innovation to a truly global stage, making the shift to a future age of the information economy a reality.”

HP bills the acquisition as necessary for future growth. The autonomy purchase will, according to HP, position the company for leadership in the $20 billion enterprise information management space. The Autonomy’s offerings will complement HP’s portfolio of technology and allow competitiveness in the government, finance, legal, pharmaceutical, and heathcare arenas. Autonomy will also give HP a content management platform to strengthen its IPG enterprise strategy.

HP is not alone in focusing efforts on the information space. EMC, a cloud and storage solution provider, acquired Greenplum, a data warehousing provider, last year. IBM has its Smart Analytics Systems offerings and Oracle has been pushing its Exadata products. This shifting technology market landscape is forcing HP to adapt in order to compete with the other big players.

How is the market reacting? In a word–badly.

The company lost nearly a third of its market value–over $10 billion–after the news broke, though to be fair, the company also introduced much uncertainty in a slew of announcements that put its tablet, phone, and computer hardware businesses in the graveyard. As of this writing, the companies stock is trading at $25.21, representing a significant discount to its 52 week high of $49.39.

What do you think about the HP acquisition of Autonomy? Will it save HP? Or is HP doomed to fail? Share your thoughts in the comments below.

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[Photo courtesy of abacusemedia.]