FAQ about HP’s acquisition of Opsware Inc.

Click below to view answers to the following frequently asked questions:

General and deal rationale

1. What is HP announcing?

HP announced today that it has signed a definitive agreement to acquire Opsware Inc., a leading data center automation software company.

2. Why is HP acquiring Opsware?

The acquisition will establish HP as a leader in data center automation and will extend HP Software's capabilities to automate the entire data center-from initial provisioning of servers, networks and storage devices to managing ongoing change and compliance requirements-with integrated process automation, removing the latency inherent in today's IT environments.

The proposed deal will expand the HP portfolio of business technology optimization (BTO) software for IT operations and combine market leadership in business service management and IT service management with market leadership in data center automation, one of the fastest growing segments of IT operations.

The proposed deal will also solve our customers' biggest pain point in IT operations- managing change. With the addition of the Opsware data center automation software portfolio, HP Software will offer market-leading solutions that mitigate risk by driving automated change throughout the data center and reduce costs by automating repetitive, manual processes.

Opsware is a results-driven, high-performing company with outstanding people who are expected to be a strong addition to HP. Additionally, Opsware has a fast-growing revenue stream (66% in FY07) and an established, loyal customer base for its automated data center capabilities.

3. Who is Opsware?

Headquartered in Sunnyvale, CA, Opsware is a market leader in data center automation. It is a public company with FY07 revenue of $101.7 million and year-over-year growth of 66%. Opsware has been identified by industry analysts as the fastest-growing server provisioning vendor and a leader in network change and configuration.

Opsware has an established, loyal customer base for its automated data center capabilities. More than 350 of the world's largest companies, service providers and government agencies use Opsware to automate their data center.

Currently, Opsware has approximately 550 employees located around the world. Opsware is a results-driven, high-performing company with outstanding people who are expected to be a strong addition to HP.

4. How do Opsware and HP products fit together?

The acquisition will combine Opsware data center automation capabilities with existing HP Software business service management and IT service management solutions to deliver the next generation of IT operations.

5. What is the value to customers?

With the addition of the Opsware software portfolio, HP Software would offer market-leading solutions that reduce the cost of running data centers, provide IT end-to-end operations and mitigate the business impact of change.

6. What is "data center automation" software?

Data center automation refers to automating the lifecycle of IT data center resources, including provisioning, deploying, changing, scaling, securing, recovering, consolidating, auditing and reallocating servers, network devices, storage devices and business applications.

7. What is BTO?

BTO helps customers make sure that every IT investment, every resource allocation and every application

8. How does Opsware support the HP business technology optimization (BTO) strategy?

BTO helps customers make sure that every investment in IT, every resource allocated and every application in development or production meets their business goals. Opsware adds market-leading technology and expertise in data center automation, turning data center operations into a competitive advantage for business. This allows businesses to accelerate their time to market and shift their spending from reactive problem solving to strategic initiatives.

Pricing and deal structure

9. What basis was used to price the deal?

HP looked at a number of factors, including public company comparables, acquisition comparables, discounted cash flow, trading range of Opsware stock and analyst price targets for Opsware stock.

10. Is this acquisition material to HP?

Opsware is an important acquisition that strengthens the HP BTO software portfolio. However, the acquisition is not material to HP from a financial reporting perspective.

11. What has HP previously said regarding its appetite for transactions?

This is an important acquisition, and we are excited about the opportunity. HP has indicated in the past that it is willing to do "digestible" strategic and financially sound acquisitions. HP's acquisition of Opsware fits that profile.

12. How much cash does HP have before and after this transaction, and how much cash is it generating?

HP ended its second fiscal quarter April 30, 2007 with approximately $12 billion in cash.

13. What is the break up fee if the transaction doesn't proceed with HP?

The break up fee is about $50 million and is payable only upon the occurrence of certain events as described in HP's agreement with Opsware.

14. How much cash does Opsware have?

As of April 30, 2007, Opsware's cash balance was approximately $74 million.

15. How much debt does Opsware have?

As of April 30, 2007, Opsware's debt position was immaterial.

Approval process

16. Does this require HP or Opsware stockholder approval?

The acquisition would be conducted by means of a tender offer for all of the outstanding shares of Opsware, followed by a merger of Opsware with an HP subsidiary. Once HP commences the tender offer for all of Opsware's outstanding shares, each Opsware stockholder will have the opportunity to make an independent investment decision whether to tender its shares in response to the offer.

Depending on the number of shares held by HP after its acceptance of all of the shares properly tendered in connection with the offer, Opsware stockholder approval of the subsequent merger may be required. HP stockholder approval will not be required.

17. Is this transaction subject to review by antitrust regulatory authorities?

The market impact of this transaction may be evaluated by U.S. and foreign regulators.

Opsware employment-related questions

General Opsware questions

27. What are Opsware's capabilities?

Opsware is a leading data center automation company. Its software automates the entire data center, from provisioning to patching, configuration to compliance and discovery to deployment, turning data center operations into a competitive advantage for business.

28. What does Opsware technology provide to HP?

Opsware adds market-leading technology and expertise in data center automation to the HP IT service management and business service management software portfolio.

29. What are Opsware's latest financials?

Opsware's financial statements for its fiscal quarter ended April 30, 2007 are included beginning on page 1 of its Q107 Form 10-Q, which is available at http://www.sec.gov/Archives/edgar/data/1100813/000110465907046684/0001104659-07-046684-index.htm.

30. Is there customer base overlap between Opsware and HP?

HP and Opsware do have customers in common. The acquisition would provide the opportunity to offer broader IT management capabilities to both Opsware customers and HP customers.

31. Does Opsware have particular strengths in certain vertical segments?

Opsware technology is used by hundreds of companies worldwide including banks, service providers, retailers, manufacturers and Internet companies

32. Who are Opsware's key competitors in the market today? How does the Opsware acquisition affect the competitive landscape?

Opsware's primary competitors include BladeLogic and IBM. We believe that the combined capabilities of Opsware and HP BTO software and services would allow Opsware to be even more competitive by providing more complete enterprise IT automation and management solutions for aligning business and IT.

33. Does the addition of data center automation take HP Software into a new market?

Opsware has a strong customer base for its data center automation capabilities. Opsware's strengths in data center automation would complement the IT service management and business service management of HP Software.

General HP questions

34. How does today's acquisition fit into HP's broader software and enterprise strategies?

This acquisition would expand HP's business technology optimization BTO portfolio and enhance HP's ability to automate IT business outcomes.

35. Does this acquisition further HP's next generation data center intentions? If so, how?

This acquisition focuses on adding new data center automation capabilities to our software portfolio.

36. What previous acquisitions has HP made for its enterprise management portfolio?

This acquisition would build upon the several acquisitions made by HP in the past three years of leading software technology, products and services to create one of the world's leading portfolio of enterprise IT management software and services. Among these acquisitions are:

Select Access from Baltimore Technologies (2003): identity access management

Talking Blocks (2003): SOA management

CodeArts (2004): virtual machine management

Novadigm (2004): client configuration management

Consera Software (2004): configuration management

TruLogica (2004): identity user provisioning

AppIQ (2005): infrastructure management

RLX (2005): infrastructure management

Outerbay (2005): storage infrastructure management

Peregrine Systems (2005): asset management, service management and service request management

TrustGenix (2005): federated identity management

Mercury (2006): application delivery and management, IT and SOA governance

Bristol Technologies (2007): business transaction management

SPI Dynamics (pending): application security assessment

37. Will there be any follow-on acquisitions?

We continually look for growth opportunities.

38. Will any HP employees lose their jobs if the acquisition is completed?

As with most acquisitions, there may be areas of overlap in certain roles. The announced agreement contains several closing conditions that must be satisfied before the acquisition can be completed, and we expect that all employment decisions will be made after those conditions have been satisfied and the closing has occurred

Employees and their representatives will be informed and, where required, consulted in connection with all employment decisions in accordance with any applicable local legal requirements.

HP Software Business

39. How will Opsware be integrated within HP?

After closing, Opsware would become part of the HP Software Business, run by Thomas E. Hogan, Senior Vice President, within the HP Technology Solutions Group, run by Ann Livermore, Executive Vice President.

40. How will the Opsware portfolio be integrated with the rest of TSG, comprising servers, storage and HP Services?

As with HP Software, Opsware supports the heterogeneous IT environments that our customers have. We believe that the combination of Opsware and HP would provide the best IT management and automation, the best IT infrastructure and the best professional services and solutions to deliver value to our customers.

Sales and customer channels

41. Will Opsware products be sold through HP?

Following the close of the acquisition, Opsware products would be available from HP through standard HP sales and service channels. More information about product integration, branding and the selling model would be available after the acquisition closes.

Additional Information

42. Where can Opsware stockholders get more information about the tender offer?

Questions and requests for assistance in connection with the tender offer should be directed to Innisfree M&A Incorporated, the information agent for the tender offer, or to J.P. Morgan.

Securities, Inc., the dealer manager for the tender offer, at their respective addresses and telephone numbers set forth below:

Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Stockholders Call Toll-Free: (877) 750-5838
Banks and Brokers Call Collect: (212) 750-5833
E-mail: info@innisfreema.com (materials requests only)

J.P. Morgan Securities, Inc.
277 Park Avenue, 9th Floor
New York, New York 10172
Call Toll-Free: (877) 371-5947

Important information

THESE FREQUENTLY ASKED QUESTIONS ARE FOR INFORMATIONAL PURPOSES ONLY AND ARE NOT AN OFFER TO BUY OR THE SOLICITATION OF AN OFFER TO SELL ANY SECURITIES. THE SOLICITATION AND THE OFFER TO BUY SHARES OF OPSWARE COMMON STOCK WILL BE MADE ONLY PURSUANT TO AN OFFER TO PURCHASE AND RELATED MATERIALS THAT HP INTENDS TO FILE WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"). OPSWARE STOCKHOLDERS AND OTHER INVESTORS SHOULD READ THESE MATERIALS CAREFULLY BECAUSE THEY CONTAIN IMPORTANT INFORMATION, INCLUDING THE TERMS AND CONDITIONS OF THE OFFER. ONCE FILED, OPSWARE STOCKHOLDERS AND OTHER INVESTORS WILL BE ABLE TO OBTAIN COPIES OF THE TENDER OFFER STATEMENT ON SCHEDULE 'TO,' THE OFFER TO PURCHASE AND RELATED DOCUMENTS WITHOUT CHARGE FROM THE SEC THROUGH THE SEC'S WEBSITE AT WWW.SEC.GOV. OPSWARE STOCKHOLDERS AND OTHER INVESTORS ALSO WILL BE ABLE TO OBTAIN COPIES OF THESE DOCUMENTS, WITHOUT CHARGE, FROM INNISFREE M&A INCORPORATED, THE INFORMATION AGENT FOR THE OFFER, AT +1 877 750 5838 OR BY EMAIL AT INFO@INNISFREEMA.COM, FROM J.P. MORGAN SECURITIES, INC, THE DEALER MANAGER FOR THE OFFER, AT +1 877 371 5947, OR FROM HP. OPSWARE STOCKHOLDERS AND OTHER INVESTORS ARE URGED TO READ CAREFULLY THOSE MATERIALS PRIOR TO MAKING ANY DECISIONS WITH RESPECT TO THE OFFER.

Forward-looking statements

These frequently asked questions contain forward-looking statements that involve risks, uncertainties and assumptions. If such risks or uncertainties materialize or such assumptions prove incorrect, the results of HP and its consolidated subsidiaries could differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including the expected benefits and costs of the transaction; management plans relating to the transaction; the expected timing of the completion of the transaction; the ability to complete the transaction considering the various closing conditions, including those conditions related to regulatory approvals; the plans, strategies and objectives of management for future operations, including the execution of integration plans; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include the possibility that expected benefits may not materialize as expected; that the transaction may not be timely completed, if at all; that, prior to the completion of the transaction, Opsware's business may not perform as expected due to transaction-related uncertainty or other factors; that the parties are unable to successfully implement integration strategies; and other risks that are described from time to time in HP's and Opsware's Securities and Exchange Commission reports, including but not limited to the risks described in HP's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2007 and Opsware's Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2007. HP assumes no obligation and does not intend to update these forward-looking statements.