Hewlett-Packard (HP) shareholders are taking the PC giant to court, accusing the company in a lawsuit of failing to properly examine the financial practices of Autonomy prior to acquiring the software firm.
The lawsuit has been filed in San Francisco district court in California. It names HP CEO Meg Whitman, predecessor Leo Apotheker, former chairman Ray Lane and Autonomy founder Mike Lynch among eight defendants, the Guardian reported.
The defendants are accused of ignoring evidence from whistleblowers and hiding concerns about the deal, which resulted in a lack of ‘cursory due diligence on a polluted and vastly overvalued asset.’
Court documents claim HP’s board of directors were too busy with company politics to properly supervise the takeover.
According to the plaintiffs, HP’s board used several methods, including ‘devices, schemes and artifices’ – to placate shareholders into buying stock.
Former CEO Leo Apotheker finalised the deal, which had been part of a plan to give HP a firmer footing in software.
Whitman inherited the acquisition when she replaced Apotheker. After her appointment, HP tried to pull out of the deal when it realised the truth, the court documents claim.
In November 2012, one year after buying Autonomy for US$10bn, HP reported that serious accounting improprieties were discovered at Autonomy, causing it to write-down US$8.8bn on its Q4 and full-year 2012 results.
HP said in a statement that it relied on the audited financial statements and the representations of Autonomy’s management and its auditors regarding Autonomy’s business and revenue.
“Those facts and figures appear to have been wilfully manipulated by certain Autonomy employees prior to the company’s acquisition, to mislead investors and potential buyers,” HP said.
Lynch, a native of Carrick-on-Suir in Ireland, had said how HP could miss US$8.8bn “beggars belief” and is a “distraction” from wider issues within the company.
The lawsuit, filed last week, is led by the Dutch pension fund PGGM Vermogensbeheer on behalf of all investors who bought shares between 19 August 2011 and 20 November 2012, the Guardian reported.