Mercury’s strength is in application management, application delivery, IT governance and service-oriented architecture governance.US computer giant Hewlitt-Packard has announced that it will buy Israeli company Mercury Interactive Corporation. HP said it would pay $52 per share for Mercury, or $4.5 billion altogether, 33% higher than Mercury’s closing price on Wall Street. This is the largest ever acquisition deal in the history of Israel’s high tech industry.

“Today, we are combining two market-leading businesses to create the most powerful management software portfolio in the industry,” said Mark Hurd, HP chief executive officer and president. “Together, they will help customers cut their IT costs, and speed the delivery of new services.”

Hurd assured analysts he didn’t buy Mercury Interactive on a whim. “We didn’t do this lightly,” he said during a Tuesday conference call with analysts. He predicted Mercury Interactive will enable Hewlett Packard to double its annual software sales to about $2 billion.

The transaction brings together the strength of HP OpenView systems, network and IT service management software with Mercury’s strength in application management, application delivery, IT governance and service-oriented architecture governance

Hurd believes Mercury’s products will serve as an ideal complement to HP’s software, which primarily helps companies ensure their computers continue to run smoothly.

Mercury’s software helps companies manage the hodgepodge of business applications that administer payrolls, sales and supplies.

Founded in 1989, and based in Yehud, outside of Tel Aviv, Mercury is the global leader in Business Technology Optimization (BTO) software and services. Award-winning Mercury solutions for automated software quality management, performance testing, application management, and IT governance are used by 95 percent of the Fortune 100 companies to maximize the value that IT delivers to the business.

According to a company press release, “Customers buy our products for two reasons: First, to manage their IT governance to ensure they are working on the right priorities, with the right processes and the right people. Second, to optimize the quality, performance, and availability of their existing applications to ensure they are delivering the value expected by the business.”

“Mercury products have helped with our effort to maintain consistency in our IT products, services and processes,” said David Sheffield, senior IT director at Air Products. “Mercury Performance Center helped us to optimize our delivery of ERP applications across our domestic and European businesses by allowing us to test the applications’ performance and optimize our IT investment before actually deploying these business systems.”

The HP-Mercury deal went through, despite legal wranglings surrounding Mercury. It was among the first companies to acknowledge its top executives improperly manipulated the timing of stock option awards to increase their potential windfalls.

In November, Mercury ousted its longtime CEO, Amnon Landon, as well as two other top executives after concluding that they looked back in time for a low point in the company’s stock price so the exercise, or “strike,” price of their options could be set at that ebb – a practice known as “backdating.”

Earlier this month, Mercury erased $525 million in profits dating back to 1992. The company still faces lawsuits from shareholders alleging management misled them.