Hewlett-Packard to acquire Opsware

Hewlett-Packard to acquire Opsware


07/24/2007    


SAN FRANCISCO ?  Hewlett-Packard Co. said Monday that it will pay $1.6 billion in cash to acquire  Opsware Inc., a software company founded by Internet pioneer Marc Andreessen that helps companies lower the cost and complexity of running data centers by automating certain management tasks.  

HP agreed to pay $14.25 per share of Opsware, a 39 percent premium over Opsware's closing price Friday. The acquisition, announced before the market opened Monday, is expected to close before HP's fiscal year ends Oct. 31.  

Opsware shares shot up $3.72, or more than 36 percent, to $14 Monday. HP shares fell 11 cents to $48.43.  

The acquisition bolsters HP's software business and underscores the need for new tools to manage increasingly complicated corporate computing centers. Opsware products make it easier for technology managers to control the servers, storage machines and networking gear in their data centers by automating the way that business applications and other jobs are handled.  

Analysts said automation is one of the few strategies that technology managers have left for reducing data center costs.  

The deal marks another windfall for Andreessen, who made a fortune in his 20s after AOL bought the pioneering Web browsing company he co-founded,  Netscape Communications, for $10 billion in 1999.  

Andreessen stands to pocket more than $138 million for his stake in Sunnyvale-based Opsware, which was 9.69 million shares and more than 9 percent of the company when it filed its proxy report in May, according to the filing.  

Once the deal closes, Opsware will become part of HP's growing software division, which also includes  Mercury Interactive, which HP bought for $4.9 billion in November, and Peregrine Systems, which HP bought in December 2005 for $538 million.  

The companies make so-called business technology optimization software, which helps businesses cut costs and simplify technology operations. Expansion in that area is a major push for Palo Alto-based HP, currently the world's No. 1 personal computer seller ahead of  Dell Inc.  

The acquisitions have brought some baggage, with former executives at each of the three acquired companies getting in trouble over accounting problems.  

Opsware's Chief Financial Officer Sharlene Abrams resigned in July 2006 after the Securities and Exchange Commission warned her that she was going to be sued for her role in the stock options backdating scandal at her previous employer,  Mercury Interactive, where she was also CFO.  

In May this year, the SEC filed civil fraud charges against  Mercury Interactive, Abrams and three other former senior officers. They were accused of illegally awarding secret stock option grants to themselves and other employees from 1997 to 2005 and falsifying documents to keep hundreds of millions of dollars in compensation expenses out of the company's financial reports.  

HP agreed to pay $28 million to settle the charges while the case against the officers was being litigated.  

And in March this year, Peregrine's former Chief Executive Stephen Parker Gardner pleaded guilty to criminal conspiracy, securities fraud and obstruction of justice for an accounting fraud scheme that bankrupted the San Diego-based company in 2002. The indictment also names seven other former Peregrine executives and three other defendants.  

Separately, HP said Monday that it will pay $214 million, or $16.25 per share, to acquire  Neoware Inc., based in King of Prussia, Pa., which makes so-called "thin-client" computers, or machines that are powered and controlled by centrally managed servers instead of individual hard drives.  

The price represents a 7 percent premium over Neoware's closing price Friday.