HP to buy Opsware

Takeover to be completed by the end of 2007

HP will have bought Opsware by the end of the fiscal year

IT giant HP is to purchase automation software firm Opsware for $1.6bn (£777m).

HP has made an offer to acquire all outstanding shares at a price of $14.25 (£6.92) each. The move will eventually see Opsware merge with an existing HP subsidiary, and is expected to be completed before the end of the fiscal year.

The purchase will supplement HP's previous acquisitions of Mercury Interactive and Peregrine Systems, boosting its portfolio of business technology optimisation (BTO) software. The company says it plans to expand the capabilities of the HP software suite, allowing the automation of entire data centres.

'The acquisition of Opsware is intended to enable HP software to help our customers resolve one of their critical pain points: controlling the increasing complexity and cost of managing the data centre,' said Thomas E. Hogan, senior vice president for HP Software.

'We expect Opsware's outstanding team will help us drive leadership across our BTO offerings.'

Ovum analyst Mary Johnston Turner believes that the purchase will have been motivated by the reputation of Opsware CEO Ben Horrowitz, who will fill a 'critical gap' in the leadership of HP's BTO group.

'While the legacy HP, Mercury and Peregrine groups have all contributed smart people and strong business leaders to the HP Software team, the organisation charts have been moving targets,' said Turner.

'Ben Horowitz brings a wealth of experience driving rapid growth of red hot start-ups and internet-age products, including stints at Netscape and AOL prior to helping to found Opsware. Whether his talents include driving convergence of multiple, strong management teams and corporate cultures remains to be seen.'