HP to fight Autonomy in court after settling lawsuits with shareholders
02 July 2014
HP confirmed yesterday that it had settled a series of lawsuits from shareholders over its disastrous $11.7 billion purchase of Autonomy in 2011. Under the settlement, the company would join forces with its shareholders to sue Dr Lynch and Sushovan Hussain, the former chief financial officer of Autonomy.
According to HP, "accounting improprieties, misrepresentations and disclosure failures" by Autonomy management were responsible for the £5.5 billion write-down it took only a year after the acquisition.
The shareholders, however, sued the company, alleging it had ignored ''red flags'' around the deal and wasted corporate assets, in breach of fiduciary duty. According to the plaintiffs, HP ''knew or should have known'' about alleged accounting irregularities and that it tried to back out of the deal keeping investors in the dark.
Lynch, while continuing to deny any wrongdoing, claimed HP destroyed the value of Autonomy itself with obstructive bureaucracy and ''internecine warfare''.
The Telegraph newspaper quoted a spokesman for Dr Lynch as saying, the company continued to reject HP's allegations.
The purchase of Autonomy was the undertaking of Whitman's short-lived predecessor Leo Apotheker. Under the leadership of Whitman, an audit conducted by HP of Autonomy's 2010 and 2011 financial documents revealed alleged overstatement of profits by a division of the company in the UK by over 80 per cent and its revenues by 50 per cent.
The fallout from the acquisition continues to dog HP with allegations of accounting irregularities sparking ongoing investigations by the Serious Fraud Office (SFO) in the UK and by the justice department, the Securities & Exchange Commission (SEC) and the FBI in the US, www.computing.co.uk reported.
Lynch continues to deny wrongdoing blaming shoddy management by HP and mishandling of Autonomy post acquisition.
In a statement, the former Autonomy management team said: ''It seems Meg Whitman will be using a large sum of HP's money to avoid explaining in court why she made false allegations regarding Autonomy in November 2012.
"We continue to reject HP's allegations, and note that over recent months a number of documents have emerged that prove Meg Whitman misled her shareholders. We hope this matter will now move beyond a smear campaign based on selective disclosure and HP will finally give a full explanation."