Hewlett-Packard Co, the world’s biggest personal-computer maker, agreed to buy ArcSight Inc for about $1.5 billion in cash to gain security software.
ArcSight investors will receive $43.50 a share, Palo Alto, California-based HP said today in a statement. That’s 24 per cent more than the stock’s September 10 closing price.
The deal follows purchases by HP in areas such as services, networking equipment and smartphones, lessening its dependence on lower-margin computers and servers. ArcSight, a maker of software used to identify suspicious activity on a corporate network, may help HP better incorporate security features into other products.
“HP wants to expand from their traditional hardware offerings — printers and computers and servers — and they’ve gone into more services and software,” said Dave Novosel, an analyst at corporate-bond research firm Gimme Credit in Chicago. “This is something that’s a little bit different for HP. This is not where they’ve had a strength in the past.”
ArcSight rose $8.89, or 25 per cent, to $43.99 in Nasdaq Stock Market trading at 9.44 am New York time. Before today, the shares had jumped 39 per cent since the start of August amid speculation it may be the target of a takeover. HP, down 26 per cent this year, fell 8 cents to $38.12 in New York Stock Exchange composite trading.
Data centres
HP’s interim CEO Cathie Lesjak agreed on September 2 to pay $2.35 billion for storage-system maker 3Par Inc, winning a bidding war with Dell Inc by offering more than three times 3Par’s closing stock price on August 13, before Dell’s interest was made public.
The ArcSight acquisition will help HP serve the data-centre market, a lynchpin of its growth strategy, said Aaron Rakers, an analyst at Stifel Nicolaus & Co in St Louis. Security software could assist customers in managing the centers, which consist of large rooms of servers that handle corporate tasks, he said. The company is trying to turn its leadership in PCs into a bigger role in corporate computing.
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Intel Corp agreed last month to pay $7.68 billion for McAfee Inc, a provider of programs that protect computers from viruses and malware. The chipmaker paid a 60 per cent premium, underscoring the growing importance of computer security and fueling speculation that related deals may be in the works.
Increasing profit
Based in Cupertino, California, ArcSight also specialises in programs that help companies and government agencies meet compliance requirements for their computer systems. It has more than 1,000 customers, such as the US Federal Reserve and Verizon Communications Inc, according to its website.
Net income at ArcSight almost tripled to $28.4 million in the fiscal year that ended in April. Sales increased 33 per cent to $181.4 million in the period.
Former HP CEO Mark Hurd left on August 6 after the company said he violated standards of business conduct. An investigation found inaccurate expense reports filed in his name that had the effect of concealing a personal relationship with an HP contractor. He has since been hired as a president of Oracle Corp, reporting to that company’s CEO, Larry Ellison.
HP has hired the firm Spencer Stuart to help it find a permanent successor for Hurd. HP has said Lesjak, chief financial officer, doesn’t wish to replace Hurd permanently.
“It’s interesting that even without Mark Hurd or his replacement that they have been so aggressive,” Paul Meeks, an analyst at Capstone Investments Inc, said.