HP Makes Play for Bluestone

Hewlett-Packard Co. Tuesday snagged Bluestone Software Inc. in a stock-for-stock deal valued at about $500 million based on Tuesday stock prices.

HP wants the company’s software to serve as the integrating platform for HP’s current software offerings and also plans to use it as the core of HP’s next-generation software strategy. Bluestone is a provider of Internet software platforms, tools and technologies for B2B, B2C and mobile Internet transactions.

Under the terms of the agreement, HP will issue Bluestone shareholders .2433 pre-split shares of HP common stock for each share of Bluestone common stock. HP will account for the transaction, which is expected to be tax-free to Bluestone’s shareholders, as a purchase. Upon completion, Bluestone will be a wholly-owned subsidiary of HP. HP expects the transaction to be accretive in its fiscal 2001 on a cash EPS basis.

HP is especially interested in Bluestone’s J2EE and XML application servers and tools, which it said would form the core of its middleware offering. HP said the servers and tools will enable customers to develop, integrate, deploy and manage J2EE and XML applications and services across the enterprise, across trading community partners and across interactions and transactions with customers using mobile appliances and devices. HP Consulting will develop a set of implementation and integration services in support of the technologies.

“A new generation of Internet software is being developed to help companies participate in the emerging services-based model of computing,” said Bill Russell, vice president and general manager of HP Software and Solutions Organization. “By adding Bluestone’s technologies to our portfolio, we’re enabling our customers to capitalize on this next wave of business and technology transformation.”

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