Autonomy Extends Acquisition Plans, Hints at Additional Opportunities

2 minute read
David Roe avatar

It seems as if Autonomy’s (news, site) acquisition of a major US company, which has been under discussion since at least last February when it raised US$ 910.9 million on the money markets, will not be announced this month as expected.

According to a company statement issued last week, the time scale for the acquisition will have to be extended as “. . .recent developments within these talks have given rise to an additional opportunity that warrants further examination.”

Expanded Deal?

While there is no agreement amongst analysts as to what the specifics of the statement mean, there is a general consensus that the deal is not likely to close by the end of next month.

Quoted in the UK’s Guardian newspaper, Deutsche Bank AG analyst Marc Geall, who used to be the head of corporate strategy at Autonomy, said that speculation is that Autonomy is in the process of discussing the acquisition of a subsidiary, but that the scope of that deal had now expanded and would take longer to close.

There are three possibilities, Deutch Bank says:

  1. The scope of the original deal has expanded.
  2. Autonomy has identified another target and is pursuing this at the same time
  3. Autonomy was buying a subsidiary and now is discussing whether it could itself be acquired by the parent company.

The third option has been dismissed by investors, while Autonomy has dismissed suggestions that the deal will be bigger than originally expected.

Autonomy has also said that that there can be no guarantee that any acquisition arising from these discussions will be completed.

Learning Opportunities

Needless to say, the statement resulted in a sharp drop in its share price, but as of this morning, it had regained most of the ground it lost.

Autonomy’s Ambition

Following the announcement last February that Autonomy was looking at acquisitions in the US, and which was confirmed by CEO Martin Lynch in a statement accompanying the Q3 results in October, some analysts predicted the purchase would be in the US$ 2 billion range.

Lynch told Bloomberg news service in October that the acquisition would be something out of the “standard Autonomy playbook” and similar to previous acquisitions.

Last year, Autonomy’s revenues increased by 47 percent — the highest in the company’s history. It sealed 66 new deals over US$ 1 million in 2009 and 47 new original equipment manufacturer (OEM) agreements. Wait and watch!