Followed hours of frenzied speculation, HP has confirmed it is acquiring UK-based information management software vendor Autonomy for $11 billion (£6.7 billion), as it exits the PC business and focuses on systems.
The acquisition, which comes at a huge premium of 79 percent to Autonomy's closing stock market value, is expected to close by the end of 2011.
Founded in 1996, Autonomy offers a broad line of information management software, including enterprise search, content management, data analysis and governance software.
It serves more than 25,000 organisations, including BAE Systems, Boeing, Citigroup, Coca Cola, FedEx, Ford, the New York Stock Exchange, Shell, Tesco, T-Mobile, the US Department of Homeland Security and the US Securities and Exchange Commission. Software companies such as Citrix, Oracle, Sybase, Symantec, Tibco as well as HP itself all incorporate Autonomy software into their own packaged offerings.
At a time when UK firms Misys and Micro Focus have also receive US takeover approaches, the news has alreay prompted political concerns. UK business secretary John Denham said that the "British economy needs a critical mass of clearly British-owned, domiciled and led companies if we're not going to be all to vulnerable to shifts in the world economy".
For HP, the acquisition will "accelerate" its enterprise software business, said HP President and CEO Léo Apotheker in a quarterly results conference call. Traditionally, HP's enterprise services and hardware sales have dwarfed its software sales. For fiscal 2010, services generated almost $35 billion in net revenue and enterprise hardware generated $18.5 billion, while software brought in $3.5 billion. Autonomy reported revenue of $870 million for 2010.
Autonomy will operate as a business unit within HP and will be led by current Autonomy CEO Mike Lynch. The company employs 2,700 workers worldwide.
HP disclosed the Autonomy purchase as one of a number of reorganizational changes accompanying its third quarter 2011 results. The company also stated it would spin off its personal computing unit and cease making webOS-based tablets and phones.
HP has also appointed John Visentin as executive vice president of HP Enterprise Services. He will report directly to Apotheker. Visentin will take the place of Tom Iannotti, who is retiring. Formerly, Visentin led HP Enterprise Services for the Americas.