Hewlett Packard made a fourth attempt at settling a shareholder derivative suit over the its $11.1 billion Autonomy Corp. acquisition, which was a complete failure.
This time, HP has limited the claims that would be released and made changes to reflect its corporate split.
U.S. District Judge Charles R. Breyer rejected earlier settlement proposals finding that the long list of claims released in the deal would potentially shield HP’s board from any future claims.
HP contends the new proposal addresses the judge’s concerns by applying the deal only to claims related to Autonomy. HP has also added a series of corporate reforms. HP split into two companies in October, separating its technology infrastructure, software and services into a company known as Hewlett-Packard Enterprise, and its personal systems and printing company into HP Inc. The new proposed settlement governance reforms would apply to both companies.
The litigation stems from HP’s August 2011 acquisition of British software company Autonomy Corp., after which it announced an $8.8 billion write-down.
Judge Breyer previously blocked another part of the settlement, rejecting a clause in August that would have paid the plaintiffs’ attorneys $18 million to help HP sue Autonomy’s top brass. The judge questioned why the parties would make HP’s retention of the plaintiffs’ lawyers a part of the settlment, when HP could easily hire them on the open market once the case is resolved.
The case is In re: Hewlett-Packard Co. Shareholder Derivative Litigation, case number 3:12-cv-06003, in the U.S. District Court for the Northern District of California.