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HP to pay USD 100 million to settle case tied to Autonomy deal

AP  |  Palo Alto (US) 

Hewlett-Packard's ill-fated acquisition of software maker Autonomy will cost another USD 100 million, as the personal computer and printer maker prepares to settle class-action litigation tied to the 2011 deal.

HP wound up paying a 64 per cent per-share premium for Autonomy as it built up its business software line while retreating from consumer electronics. The USD 10 billion price tag was 11 times greater than Autonomy's annual revenue of USD 870 million.

Only a month later, HP fired CEO Leo Apotheker, one of the deal's biggest backers, as the company struggled to justify disappointing sales and a series of missteps.

HP ended up writing off most of the purchase price for Autonomy after alleging that the company had misrepresented its true value during sale negotiations. Autonomy's founder has denied the allegations.

Hewlett-Packard Co said today that it pay the USD 100 million to a settlement fund to resolve a lawsuit stemming from the impairment charge. The money ultimately will go to people who bought HP shares between August 19, 2011 and November 20, 2012.

HP insists that the litigation has no merit, but that it chose to avoid a protracted legal battle. The company and its current and former executives and directors will be released from any Autonomy-related securities claims as part of the deal.

HP stayed out of major deals for several years following the Autonomy purchase before announcing in March that it would buy wireless networking company Aruba Networks for about USD 2.7 billion.

The PC maker has struggled to adapt to tech trends and shifting customer preferences. It is preparing to split into two companies one focused on selling computer systems and software to businesses, and the other selling personal computers and printers as part of CEO Meg Whitman's plan to stem declining sales.

Company shares edged up slightly in early trading, but they've tumbled more than 18 per cent so far this year.

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First Published: Tue, June 09 2015. 20:02 IST