HP Buys Opsware for $1.6 Billion

HP will acquire data center automation specialist Opsware Inc. (OPSW)for $14.25 per share, or about $1.6 billion.

Rich Miller

July 23, 2007

2 Min Read
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HP will acquire data center automation specialist Opsware Inc. (OPSW) for $14.25 per share, or about $1.6 billion. HP said the purchase of Opsware, which started life as LoudCloud, will add to its portfolio of Business Technology Optimization (BTO) software offerings. It's also a clear sign of the growing importance of the data center in the strategies of the largest players in the technology industry.

Opsware shares closed Friday at $10.28, but are up 37% to $14.06 in pre-market trading this morning.

UP said Opsware will extend its capabilities to automate the entire data center. "The acquisition of Opsware is intended to enable HP Software to help our customers resolve one of their critical pain points: controlling the increasing complexity and cost of managing the data center," said Thomas E. Hogan, senior vice president, Software, HP.

"We are about to see one of the biggest application and infrastructure build-outs in history," said Opsware Chief Executive Officer Ben Horowitz said. "The addition of Opsware to the HP Software portfolio will make HP the obvious choice for powering the next generation of data centers to come."

Opsware was founded in September 1999 by Horowitz and Netscape pioneer Marc Andreessen, and in 2000 was one of the last tech IPOs before the dot-com crash. In a blog post this morning, Andreessen reflects on the company's history and the significance of HP"s purchase of Opsware:

For Opsware, this means that our vision will now get delivered at much higher scale -- being part of HP's software business will ensure that our software will be used by a much larger number of organizations and have an even more dramatic impact on the industry than we would possibly have been able to reach by ourselves over the next several years. For HP, this means that HP instantly becomes the clear and overwhelming market leader in automation software for modern datacenters and computer systems.

Once the transaction closes in the fourth quarter of 2007, Opsware will become part of the HP Software business, and Horowitz will lead the Business Technology Optimization organization, reporting to Hogan.

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