Dell Passed on Autonomy Before HP Bought It
Michael Dell said in an interview with the U.K.’s Sunday Telegraph newspaper that Autonomy was shopped to Dell before it wound up in the hands of Hewlett-Packard in 2011.
Dell, CEO of the personal computer and IT concern that bears his name — a company that has been aggressively acquiring software companies in recent months — said he was approached by Autonomy. He passed on the opportunity because it was, in his words, “obviously overpriced.”
The story doesn’t go into any detail about how Dell was approached or when, but it raises some eyebrows for a few important reasons, none of which are entirely helpful to former Autonomy CEO Mike Lynch’s version of events.
On the other hand, it doesn’t make HP’s management team at the time, including former CEO Léo Apotheker and then-director now-CEO Meg Whitman, look any smarter in hindsight.
Recall that Oracle CEO Larry Ellison made a similar claim about passing up on an approach by Autonomy. It’s a sensitive topic 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.
Lynch initially denied Ellison’s version of events, only to have Oracle produce not one but two sets of PowerPoint slides produced by investment banker Frank Quattrone, slides that looked an awful lot like they were intended to help make a deal. Quattrone conceded after a bit of PR back and forth that he had been quietly pitching Autonomy to Oracle as a potential acquisition independently of Lynch.
It’s not clear in Dell’s version of events if Quattrone was involved. I reached out to him this morning and he declined to comment any further.
But here’s why it all matters: While Oracle and Dell might indeed have not been interested in Autonomy, the mere mention of meetings with Dell and Oracle to HP’s then-CEO Léo Apotheker might have had the effect of pushing up the price for Autonomy.
Think about it: Autonomy’s advisers had every motivation to do what they could to drive up the price and make the company seem as valuable as possible. The mention of a whiff of interest from Oracle and Dell, combined with rumors that were already in the water that Microsoft, too, was interested (and which goosed Autonomy’s share price), might have stirred fears of a bidding war. This might in turn have spurred HP to make the rich offer of $11 billion and change that it did. It eventually conceded that Autonomy was worth $5 billion less than it paid for it.
And that only makes Apotheker and his deal team look sillier now than they already did.
Of course, once the offer was on the table, U.K. laws made it all but impossible to walk away, even if the price seemed high after the fact. And so here we are.
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