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Peter A. Sokoloff & Co. regularly analyzes transactions which occur within the industries covered. An archive of these case studies is kept online as a courtesy to our colleagues. To receive by e-mail new case studies as they are prepared, please e-mail [email protected] with your contact information.

Archives > Transaction Case Study 57

SOKOLOFF & COMPANY CASE STUDY HP to Acquire Auntonomy plc

BUYER:   HP (NYSE:HPQ)
SELLER:    Autonomy Corporate plc (LSE:AU)
PURCHASE PRICE:  $10.3 Billion
FORM OF PURCHASE PRICE: $42.11 per share

SELLER’S FINANCIAL INFORMATION AND M&A MULTIPLES


Year
2009 2010 Trailing Twelve Months
Year Ending
June 30, 2011

Revenue

739.69M

870.37M

931.10M

EBITDA

272.08M

313.74M

410.69M

Cash

 

 

736.21M

Debt

 

 

781.76M

Purchase Price

 

 

10.3B

Enterprise Value

 

 

10.3B

Multiple of Revenue

 

 

11.06

Multiple of EBITDA

 

 

25.12

TRANSACTION DRIVERS
This acquisition positions HP as a leader in the large and growing areas of the enterprise information management space and the business analytics software and services arena.  It also complements HP’s existing technology portfolio & enterprise strategy, provides differentiated IP for services and provides a base for content management platforms.  Lastly the purchase of Autonomy moves HP out of dependency on the waning PC & hardware business into the software area.

SOKOLOFF COMMENTARY:
Much has already been written about HP’s logic and chances in making the Autonomy acquisition.  Paralleling similar choices to those made by IBM a number of years ago, HP is choosing to build its future around professional services and software.
Step one in this evolution occurred in 2008 when HP acquired professional services business EDS.  HP, under former CEO Mark Hurd, bought $22 billion of sales for a low price of 5.7x EBITDA and .62x revenue.  In retrospect this was close to a home run for HPQ.
(See our case study on the EDS/HP deal at http://sokoloffco.com/transactioncasestudy/05-21-08.php)

Autonomy doesn’t seem quite as shiny.  In light of the accompanying public disclosure that HP is now looking to divest its PC business, it is hard to rationally evaluate the intelligence of the Autonomy

 

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