Was Autonomy Shopped To Oracle? Depends On Whom You Believe

Oracle and software developer Autonomy, which HP is in the process of acquiring for $10.3 billion, are engaged in a war of words over whether Autonomy tried to get Oracle to buy it earlier this year.

The dispute, including an Oracle press release accusing Autonomy CEO Mike Lynch of having "a very poor memory" or "lying," is the latest episode in the falling out between once-allies Oracle and Hewlett-Packard.

Since Oracle acquired Sun Microsystems in January 2010 Oracle has been competing more directly with HP in computer hardware. And Mark Hurd joined Oracle as president last year after HP dismissed him as CEO. The two companies also have sparred in court over several issues, including Oracle's decision to halt development of its software products for the Itanium processor that HP uses in its Integrity line of servers.

The latest dustup began when Oracle CEO Larry Ellison, speaking on a conference call with financial analysts on Sept. 20, said Autonomy, a Cambridge, U.K.-based developer of information management and infrastructure software, had pitched itself to Oracle as a potential acquisition, but Oracle wasn't interested because of Autonomy's price tag.

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"Autonomy was shopped to us," Ellison said during the call to discuss Oracle's first-quarter results. "We looked at the price and thought it was absurdly high. We had no interest in making the Autonomy acquisition."

Ellison, on the call, also had said that Oracle's flagship database was capable of handling unstructured data such as text – a key selling point of Autonomy's software – and that Oracle didn't need to acquire another database product.

Ellison was commenting on HP's Aug. 18 announcement that it will acquire Autonomy, for $10.3 billion. HP said it expects to complete the buyout, the company's largest software acquisitions and one of its largest acquisitions ever, by the end of the year.

That prompted a response from Autonomy CEO Mike Lynch who, in a Wall Street Journal article published Tuesday, called Ellison's remarks "just inaccurate" and denied that Autonomy had been shopped to Oracle.

Late Wednesday, just before 7:30 p.m. EST, Oracle issued a statement describing how Lynch and investment banker Frank Quattrone met with Oracle president Mark Hurd and Douglas Kehring, head of M&A at Oracle, on April 1.

"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 $6 billion, Autonomy was already extremely over-priced. The Lynch shopping visit to Oracle is easy to verify. We still have his PowerPoint slides," the statement said.

Oracle has even posted the PowerPoint slides on its web site.

Next: Oracle Accuses Autonomy CEO Of Telling A "Whopper"

Lynch countered with a statement e-mailed to a number of U.K.-based journalists saying: "On one of my trips to SF (April, 2011), Frank Quattrone, whom I have known for a long time, offered to introduce me to Mark Hurd. Oracle was a customer and I have never met him, so it was a good opportunity. Frank does this from time to time on my visits [and] he has introduced me to many people. NOTE: Frank was not engaged by Autonomy and there was no process running. The company was not for sale. I recall meeting with Mark and someone else I believe called Doug. At the start of the meeting they joked that Frank was there to sell them something. Frank and I made it clear that was not the case. We then met and had a lively discussion about database technologies. The meeting lasted approximately 30 mins.Frank is happy to confirm this. There as been no other contact with Oracle since then."

Oracle provided CRN with a copy of Lynch's statement. This morning Autonomy did not immediately return a request to confirm the statement.

Quattrone works for Qatalyst Partners that, among other services, helps broker acquisitions. It's Web site highlights deals it has worked on, including the sale of Autonomy to HP. This morning Qatalyst Partners did not return a request for comment.

That brought another caustic press release from Oracle just after 1:00 a.m. EST under the headline: "Another Whopper from Autonomy CEO Mike Lynch."

’Autonomy CEO Mike Lynch continues to insist that Autonomy was never ’shopped’ to Oracle. But now at least he remembers and admits to meeting with Oracle President Mark Hurd and Doug Kehring, Oracle’s head of M&A, this past April. But CEO Lynch insists that it was a purely technical meeting, limited to a ’lively discussion of database technologies.’ Interesting, but not true. The slides Lynch showed Oracle’s Mark Hurd and Doug Kehring were all about Autonomy’s financial results, Autonomy’s stock price history, Autonomy’s price/earnings history and Autonomy’s stock market valuation. Ably assisting Mike Lynch’s attempt to sell Autonomy to Oracle was Silicon Valley’s most famous shopper/seller of companies, the legendary investment banker Frank Quattrone. After the sales pitch was over, Oracle refused to make an offer because Autonomy’s current market value of $6 billion was way too high.

"We have put Mike Lynch’s PowerPoint slide sales-pitch up on the Oracle web site with the hope Mike Lynch will recognize his slides, his memory will be restored, and he will recall what he and Frank Quattrone discussed during their visit to Oracle last April. Yesterday, the Autonomy CEO did not remember having any meeting with Oracle. Today, he remembers the April meeting and inaccurately describes how it came about and what was discussed. Tomorrow, he will need to explain his slides."

And this morning Autonomy responded with this statement:

"Last week in response to a question about unstructured information Oracle made some less-than-enlightened comments on the subject, which Autonomy pointed out in the press. Now, as an attempt at diversion from their poor positioning, Oracle has raised the issue of whether Autonomy was 'shopped by its management team' to them.

"In April 2011, there was a meeting for approximately thirty or forty minutes between Autonomy and Mark Hurd, which was set up by Frank Quattrone as an introduction to Mark Hurd. Oracle is an Autonomy customer. It was made clear that Autonomy was not for sale and no sale process was under way. Mr. Quattrone's company was not engaged by Autonomy at that time. There has been no other contact with Oracle since then. It may well be that investment banks were independently recommending Autonomy as an acquisition target to industry players but this would not have been at our behest. Qatalyst have informed us that the slides Oracle posted on its website were prepared and sent independently by Qatalyst to Oracle on 26 January. This is the first time we have seen them. Autonomy was not involved in this nor was Qatalyst engaged by Autonomy until mid-year. Autonomy did not present these slides in the meeting.

"Oracle seems a little confused about the sequence of events and origins of the data it has received, something that would suggests it needs better management of and insight into the unstructured data on itsinternal systems. We would be delighted to help."