HP to acquire Peregrine Systems for $425 million

HP to acquire Peregrine Systems for $425 million

HP is to acquire IT asset and service management software vendor, Peregrine Systems, in a cash deal for $US425 million. By integrating Peregrine's products into its HP OpenView systems management suite, HP hopes to position itself as one of the market leaders in asset management software.

The deal is subject to the approval of Peregrine shareholders and regulators. HP expects to close the deal no later than the first quarter of 2006, according to a company release.

"The timing was right to pursue Peregrine," vice-president and general manager of HP's management software business, Todd DeLaughter, said. "As part of the build out of our Adaptive Enterprise strategy, one key category we wanted to cover was asset management."

With Peregrine's AssetManager software, "We're clearly putting the keys to the IT safe firmly back in the hands of the CIO," so chief information officers can keep a close eye on asset management within their organisations, he added.

Peregrine has had a troubled financial past. The company filed for Chapter 11 bankruptcy in September 2002 after accounting irregularities surfaced leading to an investigation by the US Securities and Exchange Commission (SEC). The irregularities eventually totalled $US250 million.

In order to cut costs during 2002, Peregrine halved its staff, closed offices and sold off its Remedy service management business to BMC Software.

Peregrine emerged from Chapter 11 in August 2003 and has been playing catch-up with restating its SEC financial filings ever since. Eight former Peregrine executives were indicted in October 2004 by a federal grand jury charged with conspiracy to commit a multibillion-dollar securities fraud from March 1999 through May 2002.

DeLaughter noted that HP has been monitoring Peregrine's financial status closely for some time. "We've confirmed there's no unknown risk" in acquiring Peregrine, he said, while adding that some mechanisms in relation to the firm's restating of its financials are still ongoing.

Given a long-standing close relationship with IBM, the company might have seemed the more likely buyer of Peregrine. However, HP's DeLaughter downplayed a June expansion of a strategic alliance between IBM and Peregrine as simply renewing an existing agreement between the two. "Our intention is to support IBM customers and IBM Global Services," he said. "Going forward, we'll use HP's own services arm" to provide support to those customers.

There is some overlap between HP's and Peregrine's service management software offerings, according to DeLaughter. HP has a roadmap to put in place once the deal is approved to merge Peregrine's ServiceCenter with ServiceDesk products and any related software in development at Peregrine over the coming 12-18 months, he said.

Since HP has relied on an assortment of partners in the asset management space to date, there's no product overlap with Peregrine's AssetManager, DeLaughter said. AssetManager will form the basis for HP's asset management strategy going forward, he added.

HP has also signed a definitive agreement to acquire AppIQ, a provider of storage area network (SAN) management software. HP will fold the AppIQ business into its StorageWorks division. Proposed terms of the acquisition have not been released.

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