“The announcement that Hewlett-Packard Co. (NYSE:HPQ) was acquiring Mercury Interactive Corp. (Pink Sheets:MERQ) came last night in the midst of Katyusha barrages against Israel. It means that when there’s something of great quality, investors don’t consider fleeting matters,” Chief Scientist Dr. Eli Opper told “Globes”. Opper resides in the Krayot, north of Haifa, which has been hit by numerous Katyusha barrages by Hizbullah since the war began two weeks ago.
“On such a day, after two weeks of war, one of the largest companies in the world announced that it was acquiring an Israeli company for a huge sum,” added Opper. “Obviously, such a deal isn't decided on during two weeks of war, but the timing is important. After all, if the management of a US company decided yesterday to suspend an acquisition decision, we’d consider the decision to be significant. We can therefore consider the positive side in that they made the announcement in the midst of a war. It helps, of course, that HP is very active in Israel, so they know first-hand what is happening here. But the fact remains that the war did not deter them.”
Opper said, “Mercury is unquestionably one of the flagships of the high-tech industry in Israel over the past 15 years. Since 1988, Mercury has become a very serious company. Therefore, right now, when people are talking about exits by start-ups compared with companies with a lot of employees, unquestionably Mercury is an example of a start-up that became a global leader. Mercury also a technology leader and we aim to create more companies like it.”
Commenting on the acquisition of Mercury while it is under investigation for backdating stock options grants for executives, Opper said, “I cannot comment on that, because [former Mercury chairman, president and CEO] Amnon Landan, who led the company to fantastic achievements until last year has already paid with his job. Those running the investigation know what to do, but I can only praise him for the business he founded.”
“Globes”: On the other hand, Mercury’s investors aren’t buying industrial activity in the way Warren Buffet acquired control of Iscar Ltd. in the Tefen industrial zone, but shares. The question is to what extent is the Israeli-ness of the company relevant?
Opper: “The fact that Mercury is an Israeli company that started out as an Israeli start-up, based in Israel and founded on Israeli know-how is significant. The know-how of the company and its people is what is being bought. The buyer is HP, one of the largest companies in the world by any measure, which demonstrated before that when it buys an Israeli company it keeps the activity in Israel. HP did that when it acquired Indigo and then other Israeli companies. Indigo’s activity in Israel continues and flourishes. This means that HP buys activity, it doesn’t export it, and I’m sure that will also be the case with Mercury.
“The acquisition of Mercury again demonstrates that Israel is a leader in software. In this context, I’m reminded of the acquisition of New Dimension Software by BMC Software (NYSE: BMC) several years ago for $900 million, a record price at the time. The company still operates and flourishes in Israel under BMC.”
Published by Globes [online], Israel business news - www.globes.co.il - on July 26, 2006
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