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June 20, 2016

Emails give glimpse of conflict among Silicon Valley’s top execs in takeover deal

News: HP’s chief Whitman was reportedly against Qatalyst as advisor in Aruba deal.

By CBR Staff Writer

Recently released court papers throw light on the hostility that persisted between Silicon Valley heavyweights Meg Whitman and Frank Quattrone over a merger deal.

The bitterness between the chief executive of Hewlett Packard Enterprise and a reputed investment banker was revealed by emails that were made public by a Delaware court, The Wall Street Journal reported.

The tension between the high-profile executives cropped up over the purchase of Aruba Networks by Hewlett Packard last year.

The emails show that Whitman declined to negotiate with Quattrone’s firm, Qatalyst Partners, an advisor to Aruba in the deal and wanted another bank for the deal.

A shareholder lawsuit over the acquisition has led to the revelation of the emails regarding the purchase. An Aruba investor has alleged that Whitman’s influence in choosing an advisor in the transaction had led to differences which finally resulted in an unfair price for the company, the publication reported.

The communication provides a glimpse of the cut-throat competition that exists in merger banking.

Declining to comment on the emails, a Qatalyst spokesman said: "Qatalyst has represented clients across the table from HP in the past and expects to do so in the future."

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Quattrone, who emerged as one of the biggest dealmakers in Silicon Valley, is close to the wireless-networking company’s lead director, Daniel Warmenhoven. Both of them worked on the board of the Tech Museum of Innovation in San Jose, California.

But Quattrone reportedly came into conflict with Whitman in the Aruba deal.

Qatalyst was an advisor for Autonomy in a deal that saw HP acquiring it for $11bn. The deal, which was struck under Whitman’s predecessor, saw HP taking an $8.8bn write-down.

The emails revealed that Whitman had raw feelings over the Aruba deal even as negotiations progressed in early 2015.

Aruba CEO Dominic Orr wrote to Warmenhoven: "Meg spoke with conviction and emotion over dinner that they were guilty. Qatalyst will argue the reverse but it does not matter. The way Meg emoted about this issue — I think if we don’t insert [a] buffer person, our negotiation will suffer severely."

The email was sent after Whitman dined with Orr in January last year. Amid resistance from Whitman, Aruba roped in Evercore Partners for the deal.

Besides, the court papers reportedly show Whitman becoming furious after knowing that Qatalyst would figure on the deal’s press release.

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