Friday, September 30, 2011

Larry, Please Buy Autonomy

The Akbas Post has already informed public about Autonomy having heavily shopped itself around for two years back in August. Larry Ellison of Oracle posted Autonomy's Information Memorandum on its website.

Autonomy CEO Lynch is in big trouble with London SE and HP' $11.7 B deal could be in jeopardy. And of course, following Megg Whitman's appointment, HP soap opera continues!

Larry Ellison has built a reputation for buying companies at bargain prices; His spat with Mike Lynch is brilliantly calculated in an attempt to kill HP/Autonomy deal by having authorities heavily scrutinize the deal and any past transaction attempts that were kept from the public by Autonomy management, for which they could go to jail or be banned from executive posts in public companies. 

Most of deals come in with mult-year earnouts and stay-on bonuses for key executives, this alone could kill the deal itself. If the deal is dead, Autonomy's shares would tank and Ellison would then conveniently make his move, as he has done in the past.

According to Financial Times this morning, Autonomy, Oracle and a leading technology banker fell into a war of words over Hewlett-Packard’s high-priced acquisition of the British software company this week.

Larry Ellison, Oracle’s rambunctious chief executive, and Mike Lynch, Autonomy’s forthright head, have accused each other of lying about whether Autonomy was “shopped” to Oracle before agreeing its $11bn sale to HP, at a premium of more than 60 per cent.

Although Mr Lynch has borne the brunt of Mr Ellison’s assault this week, the Oracle chief’s real target is its increasingly bitter rival, HP. Mr Ellison has previously lambasted the HP board for discharging chief executive Mark Hurd last year, who is now Oracle’s president.

The dispute could also raise serious questions for Autonomy with the London Stock Exchange, which requires listed companies to inform shareholders about any serious takeover talks.

At the source of the spat is a presentation given to Oracle management by Frank Quattrone, whose boutique Qatalyst acted as adviser both to Autonomy and in Motorola’s $12.5bn sale to Google, the year’s two biggest tech deals.

“Autonomy was shopped to us,” Mr Ellison told analysts on an Oracle earnings call last week. “We looked at the price and thought it was absurdly high.”

Mr Lynch denied this in an interview with the Wall Street Journal, saying: “If some bank happened to come with us on a list, that is nothing to do with us.”

He went on to reprise his familiar critique of Oracle’s database products, which compete with Autonomy’s “unstructured data” management software.

In its typical splashy style, Oracle hit back at Mr Lynch by issuing a press release late on Wednesday night, accusing the Autonomy chief of telling “another whopper” by failing to mention his April meeting with Mr Hurd and Doug Kehring, Oracle’s head of M&A, in April.

“Either Mr Lynch has a very poor memory or he’s lying,” Oracle said. “After listening to Mr Lynch’s PowerPoint slide sales pitch to sell Autonomy to Oracle, Mr Kehring and Mr Hurd told Mr Lynch that with a current market value of $6bn, Autonomy was already extremely overpriced.”
Mr Lynch immediately returned fire, insisting the meeting was nothing more than a “lively discussion about database technologies”.

“Frank was not engaged by Autonomy and there was no process running. The company was not for sale,” Mr Lynch said.

Oracle then took the unusual step of publishing the full slide deck from Mr Quattrone’s presentation at Oracle.com/PleaseBuyAutonomy, which it said was made with Mr Lynch present.

“After the sales pitch was over, Oracle refused to make an offer because Autonomy’s current market value of $6bn was way too high,” Oracle reiterated.

This prompted Mr Quattrone to wade in with a new twist in the tale.

“The slides Oracle posted publicly were sent by me to Mark Hurd in January, were prepared by Qatalyst and were for the purpose of our independently pitching Autonomy as an idea to Oracle,” Mr Quattrone said. “These slides were not used in our April meeting with Mark and Doug.”

HP said in a regulatory filing that the Autonomy deal could close as soon as Monday if it gets required acceptances from holders representing 75 per cent of Autonomy’s stock.

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