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Artemis' Steer ‘gobsmacked’ at HP bid for Autonomy

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Artemis' Steer ‘gobsmacked’ at HP bid for Autonomy

ArtemisTim Steer said most of the market is ‘gobsmacked’ by the premium that Hewlett Packard has agreed to pay in a £6.7 billion deal to buy Autonomy Corporation.

The manager of the Artemis UK Growth fund told Wealth Manager he wishes shareholders of HP ‘all the best’ as the firm will be paying such a significant premium of over 60% for Autonomy, at £25.50p per share against yesterday’s closing price of £15.58.

He said HP is ‘a ship without a rudder in a storm,’ saying one minute it is manufacturing and selling PCs, then saying it wants to offload these parts of the business.

Steer added: ‘One had got to congratulate Autonomy – it has banked a great deal for its shareholders.  Maybe Mike Lynch should be running Hewlett Packard.’

Immediately after news of the bid, Autonomy’s shares soared by 76%, reaching £25.25. However, Steer highlighted at around 4pm HP’s shares had come off around 25%.

Steer said: ‘I hope for HP shareholders' sake that they have satisfied themselves and done the required homework and they have a clear vision as to how Autonomy fits in with HP's existing activities. It is very curious that the shares fell 8% yesterday ahead of the HP news – stocks usually move up ahead of a bid.’

He added: ‘M&A is back and I guess cash rich  IT companies - HP is not one incidentally - and indeed big miners are looking at acquisitions.’

The manager had shorted Autonomy, who had previously described the stock as expensive at the start of the year, saying he expected its earnings to come under pressure, according to reports. He did not reveal his current exposure to the stock.

‘Although Autonomy’s performance is up now, it has not been great at all. This time last year it was at £16, yesterday, it was just over £14. It is now at £24.73,' Steer said.

‘I can understand a bid premium of around 30% but nearly 70% is unheard of. I wish HP shareholders all the best.’

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Tim Steer
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