The agreement on the class-action lawsuit comes as HP pursues a $5 billion lawsuit against Autonomy’s former executives
Hewlett-Packard’s misguided acquisition of British software maker Autonomy keeps getting more expensive.
After spending about $11 billion to buy the company in 2011 and a year later having to shell out another $8.8 billion in charges related to what HP officials have said were questionable accounting practices by Autonomy’s former executives, the giant tech vendor will pay out another $100 million to settle a class-action lawsuit filed by disgruntled shareholders.
HP officials announced the settlement June 9, saying that while they believed the lawsuit has no merit, the agreement with PGGM Vermogensbeheer B.V.—a Dutch pension fund manager that served as the lead plaintiff in the suit—was preferable over continued and protracted litigation. In line with the agreement, HP will pay the $100 million to a settlement fund that has been set up to compensate people who bought HP shares between Aug. 19, 2011, and Nov. 20, 2012.
PGGM and other shareholders have claimed that HP executives failed to do the due diligence before buying Autonomy and then made misleading statements about the software maker’s value and the problems with it following the acquisition. A subsequent stock-price drop after the $8.8 billion write-down and claims by HP executives of Autonomy officials’ over-valuation of its company further fueled the shareholder lawsuit against HP.
HP CEO Meg Whitman—who was on the vendor’s board of directors at the time of the Autonomy acquisition—has said in the past that while there were questions about the acquisition, the software was still valuable to the company. However, much of the headlines regarding HP and Autonomy over the past two-plus years have been about court cases and investigation, and HP has been aggressive in moving against the former Autonomy executives in an effort to recoup some of the lost money.
HP earlier this year filed suit in London against former Autonomy CEO Mike Lynch and ex-Chief Financial Officer Sushovan Hussain, blaming the two for allegedly fraudulent actions during their time with the software vendor. HP is seeking about $5 billion from the two.
At the time, Autonomy’s former management team said it would respond by suing HP for $148 million, claiming the comments HP executives have made about them have been false and negligent and have cost them money, adding that HP efforts amounted to a “smear campaign.” Lynch has repeatedly denied any wrongdoing, saying problems with Autonomy after the sale were the result of poor management by HP officials.
HP bought Autonomy during the 11-month tenure of CEO Leo Apotheker, who wanted to build up the company’s enterprise software capabilities. Autonomy’s software enabled businesses to search and retrieve information in databases and other repositories across computer networks.
The settlement comes as HP executives prepare to split the company in two Nov. 1. One company, Hewlett-Packard Enterprise, will sell enterprise products and services, including servers, storage, networking and cloud solutions. Whitman will be that company’s CEO.
The other company, HP Inc., will focus on PCs and printers.
Originally published on eWeek.