BRUSSELS, Oct 20 (Reuters) - Hewlett-Packard Co. won permission from the European Commission on Friday to buy Mercury Interactive Corp. for about $4.5 billion in stock, or $52 per share.
"The Commission concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area," the European Union's executive arm said in a statement. The deal is aimed at expanding the computer maker's business software operations. The purchase of the former star Israeli technology company also puts HP in closer competition with other systems management software providers, including IBM's Tivoli unit, CA Inc.'s UniCenter and BMC Software.
It is the biggest acquisition by HP since its controversial $19 billion purchase of Compaq in May 2002. Since last year, a number of top Mercury executives have left the company amid a regulatory probe into its stock option granting practices. The financial scandal drove Mercury, once a top performing stock, to delist from the Nasdaq market.
HP is paying a premium of about a third for Mercury shares in the $4.5 billion deal, which is net of Mercury's existing cash and debt, and ranks as one of the largest prices ever paid to acquire a company with Israeli roots. The deal will nearly double HP's software business to more than $2 billion in annual revenue and deliver growth rates of 10 percent to 15 percent by 2008, the company said when the deal was announced.
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