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HP set to settle with shareholders over lost Autonomy billions

Cliff Saran

HP is close to settling a legal dispute filed by shareholders over the acquisition of British software company Autonomy.

"HP is in serious discussions to settle the shareholder derivative litigation related to Autonomy, but no final deal has been reached yet," said HP.

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The dispute follows an attempt by former CEO, Leo Apotheker, to sell the company’s market-leading PC business to fund the $10.2 bn (£7.1 bn) acquisition of Autonomy.

The price it paid for Autonomy represented  a 64% premium on the software firm's share price at the time. Analysts warned: "The price HP paid for Autonomy was 11 times the revenue."

At the time, Alan Pelzsharpe of 451 group said: "Within weeks, everyone knew it was wrong, and that they’d made a huge mistake. The company has great products and people, but there is no economic sense in keeping it all going. It needs to strip it down, maximise the strong points, and move on."

In November 2012, HP wrote down the value of Autonomy by $8.8bn, proving the critics were correct in their analysis that HP had paid far too much for the software company.

Matters got worse following write-down, when HP referred the former Autonomy management to the US Securities and Exchange Commission (SEC) and the UK Serious Fraud Office. Soon after, shareholders sued HP for $1bn, alleging mismanagement over the Autonomy case.

At the time, former Autonomy CEO and co-founder, Mike Lynch said HP’s claims were "completely and utterly wrong".

The shareholders’ revolt came to a head last year when Ray Lane was forced to step down as chairman of the board.

Commenting on the imminent HP settlement, Lynch 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."


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