Interwoven's buyout by Autonomy poses few hitches; Exelon expects regulatory OKs after summer

By Cristal Cody

New York, Jan. 22 - England-based Autonomy Corp. plc's $16.20-a-share buyout offer for Interwoven, Inc. should close without a hitch, an analyst told Prospect News on Thursday.

"The only impediment to this deal not closing was the financing they had to wrap up," said Mark Schappel, a Benchmark Co. analyst.

Looking to other sale action, Exelon Corp. said in its earnings statement on Thursday that it now expects to complete the regulatory approval process in six to nine months for its acquisition of NRG Energy, Inc.

On Wall Street Thursday, investors sent stocks down after gains made the day earlier.

The Dow Jones Industrial Average fell 105.30 points, or 1.28%, to close at 8,122.80.

The S&P 500 index lost 12.74 points, or 1.52%, to finish at 827.50, and the Nasdaq Composite index fell 41.58 points, or 2.76%, to 1,465.49.

Interwoven buyout

Autonomy's offer represents a premium of 36.8% above Interwoven's closing share price on Wednesday of $11.84.

Shares of San Jose, Calif.-based Interwoven rose $3.85, or 32.52%, to close Thursday at $15.69.

Mike Lynch, group chief executive officer of Autonomy, said in a conference call with analysts that Interwoven and its employees are "respected players."

"This will give us reach into a new customer base," he said.

The directors and executives of Autonomy and Interwoven have agreed to vote the shares they own in favor of the acquisition.

Autonomy said it expects the deal to close in the second quarter of 2009.

The buyout is subject to shareholder approval and antitrust clearance.

According to the companies, the acquisition includes a $25 million breakup fee and a termination date of June 22. The termination date may be extended through Sept. 22, 2009 if antitrust clearance is the only remaining condition.

Schappel, the analyst who follows the company, said the deal poses almost zero regulatory risks to closing.

"If something did pop up, it would be very easy for Interwoven to convince regulators they are a very small player," he said. "It's a good deal. Not too many software deals are getting done."

Justice examines Exelon

Exelon said in its fourth-quarter and annual earnings release that it received a request from the U.S. Department of Justice on Jan. 16 for additional information about the acquisition of NRG Energy.

Exelon filed the notification with the Justice Department and the Federal Trade Commission on Dec. 17.

The company said in the earnings release that it now expects to complete the regulatory approval process in six to nine months.

The company spent $11 million, or 2 cents a share, in the fourth quarter on the unsolicited acquisition, according to the earnings statement.

Analysts believe Exelon should raise the bid of 0.485 of a share of Exelon stock for each share of NRG stock, even if slightly.

"It seems they may have no intention of increasing the offer, and I understand why, but it's penny wise and pound foolish," an analyst told Prospect News. "It's just a lot smarter for Exelon to make that concession."

Exelon shares rose 73 cents, or 1.37%, to close at $53.88.

NRG's stock fell 26 cents, or 1.15%, to $22.40 in trading Thursday.

Mentioned in this article:

Autonomy Corp., plc London: AU

Exelon Corp. NYSE: EXC

Interwoven Inc. Nasdaq: IWOV

NRG Energy Inc. NYSE: NRG

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