Hewlett Packard Reaches Settlement over Autonomy Deal
Hewlett-Packard and lawyers representing its shareholders have reached a settlement over litigation related to its troubled US$11.1bn acquisition in October 2011 of UK software company Autonomy.
On 30 June HP confirmed in a message posted by the US company on its website: “HP is in serious discussions to settle the shareholder derivative litigation related to Autonomy, but no final deal has been reached yet”. Earlier today it was announced that a tentative settlement had been reached.
The reports suggest that under the terms of the settlement, involving three lawsuits, lawyers for the shareholders have agreed to drop all claims against HP’s current and former executives, including chief executive (CEO) Meg Whitman, board members and advisers to the company, the source said.
It also calls for the shareholders’ attorneys to assist the world’s largest computer maker in pursuing claims against Autonomy founder and former CEO Mike Lynch, and against Sushovan Hussain, its former chief financial officer (CFO).
The deal under which the company acquired Autonomy, a developer of software for searching and managing information, soured just over a year later after HP alleged that it had discovered “serious accounting improprieties, disclosure failures and outright misrepresentations” within the acquired company and was writing off US$8.8bn of the purchase price.
Reuters commented that “The size of the loss, and the speed with which it occurred marks the deal as one of the most disastrous done by a major company in recent years.”
Shareholders responded by filing a suit in 2012, which claimed that HP “knew or should have known” that corporate governance firms, auditors and other parties had called Autonomy’s market value into question due to concerns about its accounting methods.
Autonomy’s Lynch, who was ousted from HP in May 2012, has vigorously denied any wrongdoing. He maintains saying the company was aware of Autonomy’s accounting practices before the acquisition.