Hagens Berman Sobol Shapiro LLP, a national shareholder-rights law firm, today announced an investigation of Hewlett-Packard Co. (NYSE:HPQ) (“HP”) and its board of directors for potential breaches of fiduciary duties in connection with the company’s acquisition of Autonomy Corp. PLC (“Autonomy”).
On Nov. 20, 2012, HP announced its quarterly earnings, which included a quarterly loss and a $8.8 billion write down. The company said that HP’s acquisition of Autonomy, a British software firm HP purchased for $11.7 billion in Aug. 2011, contributed to the write down. Meg Whitman, CEO of HP, accused Autonomy of intentionally inflating financial metrics before the acquisition.
On the news, HP’s stock price fell $1.59, or about 12 percent, closing at $11.71 on Nov. 20, 2012.
HP said it has referred the matter to the U.S. Securities and Exchange Commission’s Enforcement Division and the U.K.’s Serious Fraud Office for a civil and criminal investigation, and states that it is preparing to sue “various parties” in civil courts in an effort to recover lost shareholder value. Autonomy’s founder Mike Lynch has rejected the accusations, including HP’s claim that more than $200 million of Autonomy’s revenue was improperly stated over a two-year period, which could lead to a $5 billion write down, saying that it “just doesn’t add up.”
Hagens Berman is investigating whether the HP Board of Directors is properly painting itself as a victim of the alleged fraud, or whether it failed to perform a full due diligence in examining Autonomy’s financial information before acquiring the company. The investigation also focuses on the purported reasons for HP’s write down.
“We question the due diligence performed by HP’s Board,” said Reed Kathrein, the Hagens Berman partner in charge of the investigation. “How could they miss a gap in the value of Autonomy by such a wide margin?”
Following HP’s acquisition of Autonomy in Aug. 2011, Oracle (NASDAQ: ORCL) issued a statement confirming that Autonomy had been “shopped” to Oracle, but Oracle declined because the then market price for the company of $6 billion was “way too high.”