HP Pays $100 Million to Settle Shareholder Lawsuit Over Autonomy Acquisition
Hewlett-Packard agreed on Tuesday to pay $100 million to settle a class-action lawsuit stemming from its ill-fated 2011 acquisition of British software company Autonomy.
Dutch pension fund PGGM was the lead plaintiff in the suit, which has been running since 2012. The cash payment will be paid into a settlement fund to compensate affected shareholders.
HP acquired Autonomy for $11 billion but was forced to write down its value by $8.8 billion only a year later. First Autonomy’s revenues declined and then in November 2012 HP said it had uncovered accounting irregularities at the firm. Autonomy’s managers denied that, but HP’s stock plunged to 10-year lows.
PGGM lawyer Femke Hendriks said that HP’s management had harmed investors by unduly playing up prospects for the acquisition.
The pension fund decided to pursue the suit against the U.S. tech company because it wanted to send a signal to companies that they cannot mislead investors with impunity, Hendriks said.
“Sooner or later you’ll face the bill,” she said.
HP did not admit any wrongdoing.
“While HP believes the action has no merit, it is desirable and beneficial to HP and its shareholders to resolve … the case, as further litigation would be burdensome and protracted,” the company said in a statement.
Asked why she thought HP’s then-management would have had any interest in misleading shareholders, Hendriks said that “remains a difficult question to answer.”
She said PGGM believes management had been so determined to get into a growing software business quickly that it failed to ensure auditors vetted the company’s books properly before striking a deal.
© Thomson Reuters 2015
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