The takeover of Hewlett Packard Enterprise by Britain’s Micro Focus will involve Hewlett-Packard offloading the final assets remaining from its 2011 purchase of the UK software firm Autonomy.
After buying Autonomy for $11bn (£8.3bn), HP later wrote off three-quarters of the company’s value after uncovering what it claimed were accounting irregularities at the hands of the former management team – claims that have always been strongly rejected by the Autonomy co-founder Mike Lynch and colleagues.
HP’s acquisition of Autonomy was supposed to form the central part of the US group’s move into software, but the plan fell apart after the disastrous deal cost HP shareholders billions of dollars in destroyed value. Since the acquisition, parts of Autonomy – which made corporate search software used by law firms and accountants – have been offloaded elsewhere, leaving Micro Focus to take on the remaining assets, about 20% of the original Autonomy deal.
However, the FTSE 100-listed Micro Focus is keen to stress that the deal will not be a reincarnation of Autonomy in the UK.
“Autonomy doesn’t really exist as an entity, just the products,” said Kevin Loosemore, executive chairman of Micro Focus. Loosemore said the Newbury-based business conducted due diligence across all of the products included in the deal, with no different approach taken for the Autonomy assets. No legal liabilities from Autonomy will be transferred to Micro Focus.
Neil Wilson, market analyst at ETX Capital, pointed out some of the obvious benefits of the $8.8bn deal for both Micro Focus and HPE: “It’s a big scalp for the FTSE 100 group, which has been on a buying spree of late, and marks the end of the Autonomy saga for HPE. HPE will no doubt be glad to see the back of Autonomy, which it acquired in 2011 in one of the worst deals in recent corporate history.”
Philip Carter at the technology research firm IDC said the deal was a good one for the European tech sector, at a time when European companies were being taken overseas.
“It’s a collection of assets that they will have, rather than a seamless business,” Carter added. The challenge will be in the integration of those assets, Autonomy and all.
