1. Why do you think Apotheker so eager to make an acquisition?

2. Why do most acquisitions result in paying a premium over the market price? Was the 50% premium for Autonomy reasonable? 

3. Was it unethical for Apotheker to propose the acquisition at the 50% premium? Was it unethical for Autonomy to go along with the price at a 50% premium? Who suffers the consequences of an overpriced acquisition?

4. Is there anything HP and Autonomy could have done differently to have avoided the public backlash and share price drop the company subsequently suffered?

In 2011, Leo Apotheker, HP’s new CEO, proposed an acquisition of Autonomy, a British software firm. Even HP’s new chairman of the board, Ray Lane, was enthusiastic about the proposal. When the board approved a price for Autonomy it was about a 50% premium over its market value, and its market value was already high, at about 15 times its operating profit. In 2012, HP wrote down 8.8 billion of the acquisition, essentially admitting that the company was worth 79% less than it had paid for it.

Catherine A. Lesjak, the chief financial officer at HP, had spoken out against the deal before it transpired, arguing that it was not in the best interests of the shareholders and that HP could not afford it. In the third quarter of 2012, HP lost $6.9 billion, largely because of the Autonomy mess. Its stock was trading at $13 - almost 60% less than it had been worth when the Autonomy deal was announced.