HP to settle suits over Autonomy deal; make claim against ex-CEO Lynch
Hewlett-Packard Co. and attorneys representing shareholders have agreed to settle litigation over its troubled $11.1 billion acquisition of British software company Autonomy Corp., according to a source familiar with the negotiations.
Under the terms of the settlement, involving three lawsuits, the attorneys for the shareholders have agreed to drop all claims against HP's current and former executives, including CEO Meg Whitman, board members and advisers to the company, the source said.
The exception to that will be former officials at Autonomy. As part of the agreement, the shareholders' attorneys will assist HP in pursuing claims against Autonomy's co-founder and former CEO Michael Lynch, its former chief financial officer Sushovan Hussain, and potentially others related to Autonomy, the source said. The precise nature of such claims and when HP might file them could not be learned.
The settlement, which followed mediation, is expected to be announced as soon as Monday. The source said it is likely to be signed before Monday.
HP took an $8.8 billion impairment charge in November 2012 for its purchase of Autonomy only just over a year earlier, with more than $5 billion of that linked to what HP said at the time were "serious accounting improprieties, misrepresentation and disclosure failures."
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.
SHARED RESULTS OF PROBE
Shareholders had sued HP board members and executives, accusing them of breaching their fiduciary duties and wasting corporate assets. The lawsuits sought corporate governance changes at HP, attorneys' fees, and the ability to pursue damages claims against those responsible for the acquisition.
One of the law firms representing shareholders in the settlement, Robbins Geller Rudman & Dowd LLP, declined to comment. The other firm, Cotchett Pitre & McCarthy LLP, was not immediately available for comment.
HP's allegations of accounting improprieties, misrepresentation and disclosure failures at Autonomy have prompted an investigation by the U.S. Securities and Exchange Commission and the Federal Bureau of Investigation, as well as the UK's Serious Fraud Office.
The U.S. authorities have asked for more documents and interviewed several witnesses in recent weeks, sources familiar with the HP investigation said.
Representatives of the FBI and the SEC declined to comment. The SFO said its probe was "very much in progress."