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HP to acquire IT management software company

Posted: 28 Jul 2006     Print Version  Bookmark and Share

Keywords:Mercury Interactive Corp.  HP  IT management software 

HP has signed a definitive agreement to purchase Mercury Interactive Corp., an IT management software and services company, through a cash tender offer for Rs.2,383.16 ($52) per share, or an enterprise value of approximately Rs.20,623.50 crore ($4.5 billion), which is net of existing cash and debt.

The transaction brings together the strength of HP OpenView systems, network and IT service management software with Mercury's strength in application management, application delivery, IT governance and service-oriented architecture governance. According to the press release, this combination provides customers with the industry's most robust suite for optimizing, automating and aligning IT services with business needs.

"HP's software strategy is to be the clear leader in end-to-end enterprise IT management and help our customers tightly align IT priorities with changing business requirements," said Thomas E. Hogan, senior vice president for software, HP. "Combining our HP OpenView offerings with Mercury's BTO Enterprise offerings will integrate the many building blocks of enterprise IT management into one complete solution for the entire IT lifecycle, from planning through to deployment and operations. Mercury is a results-driven, high-performing company with outstanding people that will be a strong addition to HP."

The Mercury acquisition is expected to increase the size of the HP Software business to more than Rs.9,166 crore ($2 billion) in annual revenue. Immediately following the close of the transaction, Mercury will become part of the HP Software business and both companies' sales forces will begin reference-selling each others' products.

HP forecasts that on a non-GAAP basis, the combined HP Software business will deliver revenue growth of approximately 10 percent to 15 percent and operating margin of approximately 20 percent in fiscal year 2008. On a pro forma basis, the transaction is expected to be approximately Rs.1.83 (4 cents) dilutive to non-GAAP per share earnings in fiscal year 2007.

The acquisition will be conducted by means of a tender offer for all of the outstanding shares of Mercury, followed by merger of Mercury with an HP subsidiary. The tender offer is subject to a number of conditions, including that Mercury has filed its Annual Report on Form 10-K for its fiscal year ended Dec. 31, 2005. HP expects to commence the tender offer promptly and the merger is expected to close in the fourth quarter of calendar year 2006.

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