Hewlett-Packard closes in on $10bn deal to buy Britain's Autonomy

is negotiating a $10bn (£6bn) deal to buy Autonomy, Britain's largest software company, as part of a fundamental shift away from the personal computer manufacturing business for which it is most famous.

Last night, the

giant confirmed the takeover talks, along with another set of disappointing results, and said ii would stop manufacturing smartphones and spin off or sell its businessThe spin-off would be the most dramatic event in the sector sincesold its personal computer business to Lenovo of China in 2004.For Autonomy, which makes compliance software to help companies to track emails and phone calls, a takeover would be the culmination of months of negotiations. Earlier this year, it was rumoured to have attracted bid interest from a number of global software firms, including Oracle and Microsoft. The company, which has joint headquarters in Cambridge and San Francisco, was set up in 1996 by Mike Lynch using technology that emerged from his research at Cambridge University.still chief executive and is believed to be negotiating to stay at the company underownership.
Despite growing to become the largest technology business in few consumers have heard of the firm. In an attempt toraise its profile beyond IT managers, it announced the shirt sponsorship of Tottenham Hotspur football club last year and the MercedesFormula One team in May.Neither Autonomy, which also put out a statement after the close of trading in London, would comment on the rumoured price tag under discussion, but at £6bn, the deal would represent a premium of about 70 per cent for Autonomy shares.the largest manufacturer of personal computers in the world, but a combination of weak business and consumer spending and competition from new tablet computers such as thehas contributed to sliding sales. Revenues in its so-called "personal systems group" fell 5 per cent in the second quarter of the year, and sales direct to consumers were down 23 per cent. Headline figures for the third quarter and a gloomy outlook for the fourth, released ahead of schedule last night, suggested there has been little improvement.
The appointment of Leo Apotheker, previously chief executive of the German maker to runlast year was seen as a move to shift the focus of the company services and away from its traditional hardware businesses.will still make servers and otherfor corporate clients, but is increasingly trying to bundle these together withconsulting.It is now clear Mr Apotheker is moving more quickly and radically than expected. The spin-off or salebusiness includes computers for businesses as well as for consumers, and thecompanylast night that it was also discontinuingtablet computerandsmartbased on theoperating system.the handheld device manufacturer, for $1.2bn just 16 months agoWe believesustainable competitive advantage in most consumer-facing areas,"technology sector analyst his most recent note to clients.