Computer and printer maker Hewlett-Packard Co. (HPQ: Quote) revealed Monday in a regulatory filing that the U.K. Serious Fraud Office has opened an investigation relating to British software firm Autonomy Corp. PLC on February 6.
HP is already facing several investor lawsuits after it revealed details of the deal and the hefty charges incurred on its $11.7 billion acquisition of Autonomy.
HP had revealed after an intense internal investigation that Autonomy was substantially overvalued at the time of its acquisition due to the misstatement of Autonomy’s financial performance, including its revenue, core growth rate and gross margins, and the misrepresentation of its business mix.
Autonomy is said to have intentionally manipulated and inflated its financial metrics before the acquisition. However, some reports put the onus on HP of conducting inadequate due diligence.
In a Form 10-Q quarterly report filed with the U.S. Securities and Exchange Commission, the company also noted that a similar probe has been opened by the U.S. Department of Justice on November 21, 2012. HP said its is cooperating with the three investigating agencies, including the U.S. SEC.
Palo, Alto, California-based HP acquired Autonomy in October 2011 for $11.7 billion.
HP incurred a non-cash impairment charge of $8.8 billion in the fourth quarter of fiscal 2012 relating to the Autonomy acquisition. The non-cash charge was for the impairment of goodwill and intangible assets within its software segment. HP had claimed that majority of the impairment charge was linked to serious accounting improprieties, misrepresentation and disclosure failures by Autonomy.
HP initiated an intense internal investigation on the deal after a senior member of Autonomy’s leadership team came forward, following the departure of Autonomy founder and CEO Mike Lynch, alleging that there had been a series of questionable accounting and business practices at Autonomy prior to the acquisition by HP.
Meanwhile, the various investor lawsuits related the the deal were commenced against, among others, certain current and former HP executive officers, certain current and former members of the HP Board of Directors, and certain advisors to HP. The plaintiffs in these litigation matters are seeking to recover certain compensation paid by HP to the defendants and/or other damages.
HPQ closed Monday’s regular trading session at $21.03, up $0.16 or 0.78% on a volume of 14.72 million shares.
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by RTT Staff Writer
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