HP mum on talk of it buying Bull

HP Wednesday declined to comment on reports that it is in negotiations to acquire Bull, a French IT systems integrator.

Bull's chairman and CEO, Didier Lamouche, denied the rumors on a conference call with investors and analysts Wednesday to discuss Bull's latest financial results.

"Regarding HP, no formal negotiation is underway and we have received no formal proposal whatsoever," said Lamouche.

At HP, spokeswoman Emma McCulloch said, "HP does not comment on rumors and speculation."

News of the possible acquisition was first reported July 26 on the Web site of France's Capital magazine, which stated that the acquisition price for Bull would be €720 million ($967.54 million).

Lamouche told analysts and investors that over the last two years he has thought that a global partnership between Bull and another major IT company would make sense, whether it's Bull making an acquisition or being acquired. He also said that he thinks it's Bull's economic recovery after a restructuring that may have attracted the attention of HP. "The fact that everybody finds [this rumor] credible today is recognizing the progress we have accomplished in turning around and transforming the company in the last three years," Lamouche said.

Bull reported that net income grew to €4.5 million in the first half of 2007, from €3.7 million in the first half of 2006. Revenue declined slightly, though, to €550 million in 2007 from €559.2 million in the year earlier period.

HP reported profit of $6.2 billion in fiscal year 2006 on revenue of $91.7 billion.

An HP-Bull deal doesn't sound right to Jonathan Eunice, an analyst with Illuminata. Most of HP's recent acquisitions have been of companies whose speciality added to HP's product portfolio, such as the 2006 acquisition of business technology optimization software maker Mercury Interactive.

Bull is a systems integrator, helping customers put together a combination of servers, storage, software and other technology. HP wouldn't necessarily need that, Eunice said.

"With Bull, you have to identify very specific reasons why [HP] wanted to do that but, off the top of my head, I don't... have a lot of great reasons," he said. "HP would be better served with a software or services acquisition. Purchasing other companies in the systems business is not a good strategy."

However, Eunice added, several companies have made "suboptimal" acquisitions over the years primarily to get access to the acquired company's customer list.

The IDG News Service is a Network World affiliate.