Oracle Counters Autonomy’s Lynch by Saying He Met With Hurd to Pitch Sale

By Aaron Ricadela and Vivek Shankar - Sep 29, 2011 9:27 AM GMT+0700

Oracle Corp. (ORCL) said Autonomy Corp. Chief Executive Officer Michael Lynch and banker Frank Quattrone pitched their company to Oracle executives before selling it to Hewlett-Packard Co. (HPQ), countering Lynch’s retelling of events.

Lynch had said in a Wall Street Journal article that Autonomy didn’t directly present the company to Oracle as a possible buyout target. Autonomy, a software maker based in Cambridge, England, agreed to be acquired by Hewlett-Packard for $10.3 billion on Aug. 18.

“The Lynch shopping visit to Oracle is easy to verify,” Redwood City, California-based Oracle said yesterday in a statement. “We still have his PowerPoint slides.”

Oracle’s statement escalates tensions between the company and Hewlett-Packard, onetime allies that increasingly compete in computer servers and software. The feud intensified in 2010 when Hewlett-Packard ousted CEO Mark Hurd, a friend of Oracle CEO Larry Ellison. A month later, Hurd went to work for Oracle as president.

Hewlett-Packard’s next CEO, Leo Apotheker, faced criticism for the 64 percent premium paid for Autonomy, a maker of software for searching corporate data. The deal contributed to the board’s decision to replace Apotheker with Meg Whitman last week, people familiar with the matter have said.

‘Absurdly High’

During a Sept. 20 conference call with analysts, Ellison said Autonomy had solicited interest from Oracle before the Hewlett-Packard deal.

“Autonomy was shopped to us,” he said. “We looked at the price and thought it was absurdly high.”

In the Wall Street Journal article published this week, Lynch called Ellison’s remarks “inaccurate,” setting off a volley of statements and counterstatements.

“Either Mr. Lynch has a very poor memory or he’s lying,” Oracle said yesterday. “The truth is that Mr. Lynch came to Oracle, along with his investment banker, Frank Quattrone.”

In a January e-mail sent from Quattrone to Hurd, obtained by Bloomberg News, the banker touted the value of Autonomy as an acquisition.

“It’s a very strategic asset that could alter the balance of power in the industry for whoever might acquire it,” he said. Quattrone didn’t immediately respond to a request for comment.

Pitch Meeting

About two months later, at a meeting attended by Hurd and Senior Vice President Douglas Kehring, Lynch and Quattrone made their pitch, Oracle said. The men were told that with a current market value of $6 billion, Autonomy was already “extremely overpriced,” Oracle said.

Lynch responded to that depiction of the meeting by saying it was held because Oracle is an Autonomy customer.

“In April there was a 30-40 minute meeting between Autonomy and Mark Hurd, which was set up by Frank Quattrone as an introduction to Mark Hurd,” Lynch said in an e-mailed statement. “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 under way. Mr. Quattrone’s company was not engaged by Autonomy at that time. There has been no other contact with Oracle since then.”

To contact the reporters on this story: Aaron Ricadela in San Francisco at aricadela@bloomberg.net; Vivek Shankar in San Francisco at vshankar3@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net