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H-P to Snatch Up Opsware

It will also buy Neoware.

Updated from 9:27 a.m. EDT


(HPQ) - Get HP Inc. Report

added the latest piece to its growing software puzzle Monday, with a $1.6 billion acquisition of




The deal brings a fast-growing, though money-losing, company with key technology under H-P's roof, bolstering H-P's efforts to become a one-stop shop for corporations building expensive back-end data centers.

The all-cash tender offer of $14.25 a share represents a 38% premium of Opsware's most recent closing price of $10.28.

News of the deal sent Opsware's shares soaring 36%, or $3.75, to $14.03 in midday trading Monday.

The deal is the latest in a string of big-ticket software acquisitions by H-P. In 2006, it

purchased Mercury Interactive for $4.5 billion , and H-P picked up Peregrine Systems for $425 million in 2005.

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H-P said the deal with Opsware will improve its ability to automate jobs like setting up servers and networks as well as managing ongoing changes at its customers' data centers.

"The acquisition of Opsware is intended to enable H-P Software to help our customers resolve one of the critical pain points: controlling the increasing complexity and cost of managing the data center," said H-P Software VP Thomas Hogan in a statement.

Sunnyvale, Calif.,-based Opsware was founded by Marc Andreessen, the Internet pioneer who created the original Netscape Web browser. Opsware CEO Ben Horowitz will lead H-P's business technology optimization group after the deal closes, reporting to Hogan.

Opsware has lost money every year since it was founded in 1999, posting a $16 million net loss in its most recently-ended year. But the company's sales have grown by more than 60% for the past two years in a row.

Goldman Sachs analyst Laura Conigliaro, who rates H-P a buy, estimated that Opsware should add roughly 2 percentage points to H-P's software group's growth in calendar 2008.

And she said that Opsware's rich profit margins should help H-P's software group attain its profitability target of 18% to 22% in 2008 -- a nice boost from the 8% operating margin that H-P's software division posted in its most recent quarter.

Goldman Sachs makes a market in Hewlett-Packard securities, has managed a public or Rule 144A offering for the company and provided it with investment banking and non-investment banking services in the past 12 months.

In a separate announcement Monday, H-P said it will buy



, provider of thin client computing products, for $16.25 a share, or $214 million overall.

Shares of H-P were off 4 cents at $48.50 in midday trading Monday.

The Opsware acquisition will be conducted by means of a tender offer for all outstanding Opsware shares, after which Opsware will merge with an H-P subsidiary. The deal is expected to close before the end of the H-P's fiscal fourth quarter in October subject to certain closing conditions and regulatory approvals.