Hewlett-Packard announced on Tuesday that it will acquire management software company Mercury Interactive for US$52 a share, or US$4.5 billion in cash.
"I am confident that this transaction means HP is building a software business that must be reckoned with," said Mark Hurd, HP's chief executive officer, on a conference call following the company's announcement.
The idea appears to blend HP's OpenView systems and network management software for data centres with Mercury's products for managing application development. HP has been focused on improving the quality and breadth of its software offerings over the past year, Hurd said.
IT managers are increasingly using virtualisation capabilities with their servers and storage devices and need sophisticated management software to keep track of such a complex operation, Hurd said. The Mercury deal is part of HP's discussions in the past about "building an ERP (enterprise resource planning)-like capability for the management software market," he said.
The deal, when completed, will increase the size of HP's annual software business to US$2 billion in revenue, the companies said. Current Mercury CEO Tony Zingale will stay with HP throughout the rest of the year and going forward through the "medium-term," he said on the conference call. The Mercury business group will report to Thomas Hogan, senior vice president of software for HP.
Mercury has had its fair share of problems with the SEC over the past few years. It was one of the first companies named in the stock-option backdating scandal that has plagued several technology companies. Last November, three Mercury executives including former CEO Amnon Landan resigned following an internal investigation.
Hurd said HP had taken a close look at Mercury's current situation and pronounced itself satisfied with the results. "We look at whether (potential acquisitions) make strategic sense, financial sense, and operational sense. In this case, this acquisition made all three."
