Hewlett Packard (HP) will have to pay $100 million to settle a class-action suit filed by its investors following the acquisition of British software company Autonomy in 2011.
The money received from HP will be used for compensating investors who purchased HP shares from August 19, 2011 through November 20, 2012.
In October 2011, HP acquired Autonomy for $11 billion. However, in just the year following the acquisition, HP announced it had to write off $8.8 billion of Autonomy's value as a result of misinterpretation, disclosure failures and accounting improprieties. The management at that time blamed the previous management.
The huge write-off resulted in the company's share price to plunge to its 10-year low, which prompted shareholders to file a lawsuit against HP.
In March 2013, a Dutch pension fund manager called PGGM was appointed by the court as the Lead Plaintiff in the Action.
PGGM revealed that, in May, it filed an Amended Consolidated Class Action Complaint against HP as well as some of the company's former and existing directors and officers. In the lawsuit, PGGM alleged that HP violated several federal security laws by making a number of omissions and false statements in connection with Autonomy's acquisition.
PGGM also alleged that HP made misleading and false statements regarding the $11 billion purchase of the software company in 2011, including the actual value of Autonomy and the causes for the poor performance of the acquired company.
"The Complaint further alleged that when the true facts concerning Autonomy's accounting improprieties and over-valuation were revealed to investors, ultimately culminating in an (sic) USD 8.8 billion write-down of the goodwill associated with Autonomy on November 20, 2012 HP's stock price plummeted, damaging HP shareholders severely," stated PGGM on its website.
PGGM revealed that it took the Lead Plaintiff's responsibility as it is critical that investors in a company are adequately and timely informed regarding material information that might impact the shareholders' decisions regarding investments. PGGM suggests that it had taken important strides in the U.S. for protecting investments that aggrieved investors.
Photo: Tori Rector | Flickr
