HP has said it is in “serious discussions” to settle shareholder litigation related to its disastrous $11.1 billion (£6.5bn) acquisition of Autonomy in 2011, and reports said a settlement could be announced as early as Monday.
The terms of the settlement would see attorneys representing shareholders drop three lawsuits against the company, including all claims against HP’s current and former executives, including chief executive Meg Whitman, board members and advisers to the company, according to unnamed sources cited by Reuters.
The deal would instead see shareholder attorneys assist HP in pursuing claims against former Autonomy staff, including ex-chief executive Mike Lynch, former chief financial officer Sushovan Hussain and possibly others. The exact nature of these claims and when HP might file them remained unknown.
HP shared the results of its investigation into Autonomy with shareholders’ attorneys, according to Reuters’ sources. The report said that the shareholders’ attorneys would receive fees for helping HP pursue claims against Autonomy as part of the settlement deal.
“HP is in serious discussions to settle the shareholder derivative litigation related to Autonomy, but no final deal has been reached yet,” HP said in a statement on Friday.
The company took an $8.8 billion charge in November 2012 related to the Autonomy purchase, more than $5 billion of that linked to what HP called “serious accounting improprieties, misrepresentation and disclosure failures”.
“We continue to reject HP’s allegations,” said a spokesman for the former Autonomy management team in a statement. “We hope this matter will now move beyond a smear campaign based on selective disclosure and HP will finally give a full explanation.” Autonomy’s former management have claimed that HP was aware of its sales and accounting practices.
The spokesman added that the settlement seemed to be designed to avoid embarrassing court appearances by Whitman and other HP executives.
HP responded by reiterating in a statement that its evidence showed that Autonomy “created the illusion” that its size and prospects were greater than they were, which “had the effect of misleading investors and HP”.
A spokeswoman for former HP chief executive Leo Apotheker, who executed the Autonomy deal and was forced to leave the company shortly after it was completed, said he had “maintained all along that he acted with integrity, good faith and in partnership with the HP Board on the Autonomy acquisition”.
The shareholder lawsuits alleged that HP board members and executives breached their fiduciary duties and wasted corporate assets, seeking governance changes at the company, attorneys’ fees, and the ability to pursue damage claims against those who were behind the acquisition.
HP faces ongoing investigations by the US Securities and Exchange Commission, the FBI and the UK’s Serious Fraud Office over the Autonomy deal.
While HP’s legal battles are largely over the enormous sum paid for the acquisition, HP ironically remains committed to the Autonomy technology itself, which even plays an increasingly central role at the company.
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