Hewlett-Packard says it is suing the founder of Autonomy, a data intelligence company that HP bought four years ago in what is now seen as a disastrous acquisition. In return, the founder says he will also sue.
HP, based in Palo Alto, Calif., said it was seeking approximately $5.1 billion from Michael Lynch and Sushovan Hussain, who was the chief financial officer of Autonomy.
“They engaged in fraudulent activities while executives at Autonomy,” HP said in a written statement Tuesday. The company declined to comment further.
Through a public relations firm, Mr. Lynch said he would sue HP “for loss and damage caused by false and negligent statements“ that HP made on Nov. 20, 2012, and later in what was called “HP’s subsequent smear campaign.” The suit, which the statement said would be filed in Britain, where Autonomy is based, will most likely seek more than 100 million pounds, or about $150 million.
HP purchased Autonomy for about $11 billion in 2011, and in November 2012 it took an $8.8 billion accounting charge related to the acquisition. HP has said that Autonomy had “serious accounting improprieties,” including misstatements of operating profit, amounting to $5 billion.
Meg Whitman, HP’s chief executive, called the improprieties “designed to be hidden,” and HP notified both the Securities and Exchange Commission in the United States and the Serious Fraud Office in Britain about its concerns.
Mr. Lynch has repeatedly denied any wrongdoing, and has expressed surprise at the extent to which he is being pursued.
In January, British authorities closed their investigation, citing “insufficient evidence for a realistic prospect of conviction.” The United States investigation is continuing.
This month, a judge approved settlement of a lawsuit between HP’s shareholders and HP that was related to the Autonomy acquisition. The shareholder lawyers dropped all claims against HP and its executives, while HP agreed to some governance reforms and said it would pursue claims against Autonomy executives.
HP also appears to be paying about $8 million in fees and costs to the shareholders’ lawyers, according to a subsequently published notification.