Mergers, Acquisitions and Takeovers Case Study

Hewlett Packard’s acquisition of Mercury: Strengthening Presence in Corporate Applications Software

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Abstract:

Hewlett Packard (HP) was a US based computer and printer giant. The computer and printing divisions contributed to more than half of HP’s revenues in 2005.HP was considered a small player in the margin-rich software business. HP had software called OpenView for corporate applications. HP had an aim of strengthening its software business and had made a slew of acquisitions of software companies in the past.

In July 2006, HP acquired Mercury, a US based software company specializing in Business Technology Optimisation (BTO), software which helped companies to ensure that their information technology (IT) systems were working on business priorities and delivering maximum value. Analysts expected BTO business to exceed $ 1.9 billion in the coming years. HP believed that the acquisition would help it in strengthening its presence in the corporate applications software.The case discusses the business model of HP and the possible synergies of the acquisition.

Pedagogical Objectives:

• The concepts associated with business models of the computer companies
• The issues related to the different business segments in the software market
• The issues related to shift in the business model by a computer company to concentrate on the margin rich and booming business segments
• The issues related to inorganic growth through acquisitions
• The possible synergies of acquisition
• The challenges in store for the merged entity after acquisition.

Keywords : Mergers,Acquisitions,Alliances Case Study;Hewlett-Packard; HP open view; HP adaptive enterprise; Mercury portfolio management; ERP

Contents : 
Mercury Interactive Corporation
HP’s Business Model
The ERP Business
Synergies of HP-Mercury combination
HP Segment-wise Revenue Break-up for year 2005
Corporate Applications Software Market Players