HP bids £7bn for Autonomy: Another bid at a huge premium to market valuations.

FTSE100 @ 4962.94, -129.29 (-2.54%)
Autonomy Corporation @ 2490p, +1061p (+74.25%)

Well, despite the world markets collapsing around our ears Autonomy is one of the rare risers on the FTSE but it isn't a minor jump, its a 74% jump following an overnight bid of £7bn from Hewlett-Packard.

The actual offer of £25.50 (all cash) is at a 78% premium to last nights close, so there is still 2.5% left for anyone who wants to jump in at £24.90 albeit with a small risk of it not going through.
Not sure how much this affects the deal but the exchange rate is currently moving in the favour of sterling at $1.65 to the pound which would make it more expensive still for Hewlett-Packard unless they have funds abroad or have hedged beforehand.
But, I have also read a headline somewhere suggesting that Microsoft might enter the bidding process for Autonomy so there could be more to come.

Again, to me its another signal that, following the indiscriminate sell-off, there is value around beyond the horizon that a recession might provide. Technically a recession being defined as two consecutive quarters of negative growth. All a bit short sighted really as, once they decide we are in recession, we might already be out of it as it is based upon 6 months of historic data. 

I've mentioned it earlier but have enclosed a 2 year chart of the FTSE100 to show the slightly less dramatic but still wealth damaging 1000 point fall (5800 - 4800) suffered by the FTSE100 last year prior to it ending the year at 6000. Can I recall exactly what happened last year that led to the 1000 point pull back? No, but it was probably sovereign debt around the P.I.I.G.S (Portugal, Italy, Ireland, Greece, and Spain), so the reasons are probably not too much different to today other than some inertia before another recession is declared.

FTSE100 - 2yr chart - Click to enlarge and back button to return (chart courtesy of Digitallook)

As ever, interesting times.

www.telegraph.co.uk: Autonomy board backs £7bn Hewlett-Packard offer