Autonomy denies Oracle allegations that the company is over-valued and its chief executive is a liar
Oracle and Autonomy are engaging in an acrimonious spat over whether Autonomy shopped itself to Oracle ahead of its recently announced $10.3 billion (£6.6bn) acquisition by HP.
At the heart of the war of words is Oracle’s allegation that the Autonomy buy was overpriced, and whether Autonomy chief executive Mike Lynch lied about the company approaching Oracle for an acquisition.
Oracle chief executive Larry Ellison launched the debate during Oracle’s earnings conference call on 20 September, saying: “Autonomy was shopped to us. We looked at the price and thought it was absurdly high. We had no interest in making the Autonomy acquisition.”
Following these remarks, Lynch told the Wall Street Journal that Ellison’s remarks were “inaccurate”. If Autonomy was indeed presented to Oracle as an acquisition target, it was done without Autonomy’s involvement, Lynch said.
“If some bank happened to come with us on a list, that is nothing to do with us,” Lynch told the Journal.
Oracle responded by upping its original claim: not only had Autonomy been shopped to Oracle, but Lynch had directly approached Oracle about an acquisition in April of 2011.
“‘Some bank’ did not just happen to come to Oracle with Autonomy ‘on a list’,” Oracle stated. “The truth is that Mr Lynch came to Oracle, along with his investment banker, Frank Quattrone, and met with Oracle’s head of M&A, Douglas Kehring and Oracle President Mark Hurd at 11am on 1 April, 2011. After listening to Mr Lynch’s PowerPoint slide sales pitch to sell Autonomy to Oracle, Mr Kehring and Mr Hurd told Mr Lynch that with a current market value of $6bn (£3.8bn), Autonomy was already extremely over-priced. The Lynch shopping visit to Oracle is easy to verify. We still have his PowerPoint slides.”
PowerPoint presentations published
The documents are marked as having been prepared by Qatalyst, Quattrone’s merchant banking firm, and display financial data related to Autonomy. However, there is no specific indication that they were part of the type of presentation indicated by Oracle.
Autonomy agreed that the meeting had taken place, but said it wasn’t related to an acquisition pitch. He repeated that the documents could have been prepared independently by Qatalyst.
“It may well be that investment banks were independently recommending Autonomy as an acquisition target to industry players – that is standard practice for M&A bankers – but this would not have been at our behest,” Autonomy stated. “This is the first time we have seen [the slides]. Autonomy was not involved in this nor was Qatalyst engaged by Autonomy until mid-year.”
Autonomy said the April meeting was designed to introduce Lynch to Hurd.
“In April there was a 30 to 40 minute meeting between Autonomy and Mark Hurd, which was set up by Frank Quattrone as an introduction to Mark Hurd,” Lynch stated. “Oracle is an Autonomy customer. In the meeting, in response to a joke about Mr. Quattrone’s presence, it was made clear Autonomy was not for sale and there was no process underway.”
Ironically, Autonomny’s speciality is managing unstructured data, which would include meeting notes, and Autonomy made a point of saying that Oracle’s statements revealed a difficulty in handlig this kind of material.
“Oracle seems a little confused about the sequence of events and origins of the data it has received, something that would suggest it needs better management of and insight into the unstructured data on its internal systems,” the company stated. “We would be delighted to help.”
The Autonomy acquisition is part of a complex series of events at HP, with the company dropping its webOS platform, and announcing plans to spin off its PC business and dumping chief executive Leo Apotheker.
Oracle is not the only company taking advantage of the turmoil to take pot-shots at HP, with Acer saying it is looking to exploit the situation to expand its PC business.