Nutanix drops 10% after report HPE interest in acquisition wanes, talks end (update)
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Update 9:40am: Updates shares.
- Nutanix (NASDAQ:NTNX) fell 10% after a report that Hewlett Packard Enterprise's (NYSE:HPE) interest in a potential acquisition of Nutanix (NTNX) is said to have cooled.
- HPE is no longer in talks with Nutanix (NTNX), according to a Dealreporter item, which cited sources. An HPE spokesperson (HPE) confirmed in a statement to Dealreporter that there are no discussions with Nutanix (NTNX).
- The update comes after Bloomberg reported late last month that HPE expressed takeover interest in Nutanix and held talks with the cloud computing provider in recent months.
- Nutanix (NTNX) shares jumped 25% on Oct. 14 after a WSJ report that the cloud-computing firm was exploring a sale after getting takeover interest. The company was expected to see interest from private equity firms and strategic buyers.
- Nutanix former CEO reportedly turned down bids from Cisco (CSCO) and HPE in 2016 before Nutanix (NTNX) had its IPO.
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Comments (11)
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@G_X_C Well, it was down 8 pct at close, but this is a good question. I wondered the same thing. It certainly hasn’t given up all of its takeover premium. I haven’t followed it that closely for the last month. Fortunately, I sold out when it got over 30, because it just looked too expensive for there to be any more upside if HPE was the actual buyer. HPE simply can’t afford to pay that big a multiple and not destroy it’s own market cap. HPE might have gotten some multiple expansion if it bought NTNX, but not enough to offset the dilution and sustain its stock price. I suspect the reason that NTNX has held up is that the market never thought that HPE was the best buyer, or the only interested buyer. I suspect that investors still place some probability on Cisco? I think it is known that Cisco attempted to buy NTNX before NTNX went public, but simply wouldn’t pay the $10 billion demanded, or whatever it was. So maybe investors think Cisco will finally do a deal now? But I have no idea if so many years later Cisco still wants this. Beyond Cisco, maybe ORCL might be interested? Would Dell do something aggressive like this? Certainly it would be very dilutive, but maybe they think it would bring them into a more strategic sale, and might help with cloud penetration and positioning. But the cost of debt capital is so high right now. Is there a crazy PE buyer? Thoma Bravo has continued to pay up for quality assets like Coupa. Is it possible that one of the other big PE funds could do something like that with NTNX? Would a PE fund that has a sizeable asset in their portfolio buy this to rescue that asset? Vista? SLP? I would say that’s unlikely But maybe there is some speculation about that.Has NTNX maybe leaked out that they are going to have a good quarter? I have no idea, but that often happens when M and A discussion end. These are all just questions. For me, I don’t see a reason to jump back in at mid 20s. At high teens or low 20s, I would probably do do it.