New HP CEO will be left holding Autonomy baby

The deal Leo Apotheker pushed through HP agreeing to buy UK data analysis company Autonomy may prove to have been one of the triggers for his demise, but his replacement is highly unlikely to be able to back out.

Despite reports of very strong shareholder disapproval for the acquisition, three key factors work together to lock in the deal.

HP is paying with cash instead of shares. Cash deals do not need shareholder approval and cannot be blocked by them.

Even if the shareholders could influence the board and the new CEO to rescind the decision, under the UK's Takeover Panel rules, which govern large company deals of this nature, once the deal has been agreed it cannot be undone except in cases of material adverse change (MAC) in the company being purchased. Autonomy is in little danger of any such change in the short term, and the Takeover Panel has historically been very reluctant to allow changes in the terms of a deal even after quite substantial events. Both 9/11 and the 2011 Japanese earthquake have been used as reasons for requests for MAC-driven takeover changes, but those changes were denied on the grounds that the long-term strategic value of the deals could not be shown to have been affected.

Finally, the deal has been signed: it's done.

Unless there is some truly exceptional change in Autonomy's circumstances in the near future, the only way HP could divest itself of the company is by selling it on. As the Apotheker deal was extremely highly priced — at $11bn (£6.7bn), it was around eleven times Autonomy's earnings — any such sale would almost certainly result in a very considerable and immediate loss to HP.