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Autonomy Was Shopped to Dell As Well As Oracle
HP wound up buying the joint for $11.3 billion late last year and writing off $8.8 billion last month
By: Maureen O'Gara
Dec. 11, 2012 08:00 AM
Autonomy is more shopworn than we knew.
Michael Dell confided to a reporter from Britain's Sunday Telegraph this weekend that, like Oracle, he was offered the UK software company before HP bought it.
Michael said he quickly passed because it was "overwhelmingly obvious" that it was overpriced and that "any reasonable person" would have come to that conclusion.
HP wound up buying the joint for $11.3 billion late last year and writing off $8.8 billion last month when it charged Autonomy's old management team with cooking the books and called in the FBI, the SEC and the UK's Serious Fraud Office.
Of the $8.8 billion total, $5 billion was attributed to "improprieties" in Autonomy's accounting.
Dell said he was very surprised at the size of the premium HP was willing to pay. "The premium that you pay is in some way a measurement of the risk that you're willing to take on. If you pay a small premium relative to the market's then current opinion, you are actually not taking on very much risk, but if you pay an unbelievably large premium, you are taking on an unbelievably large risk," he said.
At the time the stock market valued Autonomy at roughly $5 billion.
When HP announced the deal last year Oracle CEO Larry Ellison was quick to say that Autonomy had been shopped to him too. Autonomy founder Mike Lynch denied it and Oracle retorted by coming up with two slide decks that were run up by Autonomy's banker Frank Quattrone and issuing a press release that said, "Either Mr. Lynch has a very poor memory or he's lying."
The Lynch-Quattrone story eventually became that Quattrone approached Oracle independent of Lynch.
Now the CEO of Dell is saying the same thing Ellison said. He didn't think it was worth the price asked let alone what HP paid.
Forbes figures the amount HP is writing off is round about the premium it was gulled into paying.
All Things Digital says the Dell disclosure on top of Oracle's makes things uncomfortable for Lynch because "as a British company, it would have been illegal for Autonomy to be ‘shopping' itself around to potential buyers without first disclosing the fact to shareholders, though rumors that it was in play had been making the rounds since late 2010."
The blog also jumps to obvious conclusion: HP's then-CEO Léo Apotheker was spooked into overpaying at the mention of meetings with Dell and Oracle for fear of a bidding war.
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