HP buys Mercury for US$4.5B billion

Channel partners were initially uncertain about how product lines will mesh following the US$4.5-billion acquisition of Mercury Interactive Corp. by Hewlett-Packard.

The deal, which was announced last month, is HP’s largest acquisition since its US$19 billion purchase in 2002 of Compaq Computer under former CEO Carly Fiorina.

Based in Mountain View, Calif., Mercury is best known for testing and performance products such as BTO Enterprise and Quality Center. It was also the focus of a stock options probe in the United States, which led to the resignation of three senior executives and its delisting from Nasdaq earlier this year.

HP has been trying for several years to bolster its management software business, which is based around its OpenView products, a line criticized for being expensive and unsuited to mid-market customers.

“I am confident that this transaction means HP is building a software business that must be reckoned with,” HP chief executive Mark Hurd said in a teleconference call announcing the deal.

Canadian HP OpenView partners said it will take time before they understand more clearly whether the addition of the Mercury portfolio would open up new areas of opportunity within their own businesses.

“I don’t know the applications from Mercury that well,” admitted Gilles Laferrière, director of consulting services at PCD Solutions in Montreal. “(Network and application management) are very different areas . . . I think there’s room to focus on one of them.”

Could be appealing
PCD, for example, has deployed OpenView in a variety of customer settings, and in some cases works with partners such as Deloitte on more comprehensive projects.

“If we’re installing software on service desks, we’re going to focus on integrating the software with the processes that are in ITIL,” he said, referring to the IT Infrastructure Library set of best practices. “We’re not the ones that will define the processes, but we’ll make the bridge between the tools.”

Edward Pham, president of Real IT Management Inc. in Ottawa, said the combination could appeal to large corporations, particularly if they have a lot of in-house development work going on.

They do need to have an application to manage their development site, but the percentage is fairly small,” he said. “It can help handle the change management and the release cycle for those applications. There has been some interest among a few of our customers, but I’m not pursuing any new business around that right now.”

Mercury has been trying to recruit Canadian resellers for its products since 1997. Last year, the company hired former PeopleSoft Canada general manager Andy Aiklen to run its Toronto office. Earlier this year, the company signed a deal in which SAP Canada agreed to resell Mercury’s LoadRunner software. Spokespersons for SAP Canada did not return phone calls at press time.

Solstice Software, based in Claymont, Del., competes with Mercury in some areas of software and application testing, but has been its partner in other areas. Chris Benedetto, Solstice’s vice-president of marketing, said the HP takeover will provide better visibility into system performance and validates the need for management control and assurance over a variety of businesses.

HP expects to close the deal in the fourth quarter of this year. It said Mercury will increase the size of its business to more than US$2 billion.

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