Hewlett-Packard Agrees to Reforms

(CN) - A federal judge preliminarily approved a settlement between Hewlett-Packard and shareholders over the botched acquisition of Autonomy Corp.

U.S. District Judge Charles Breyer in San Francisco approved the settlement on March 13 after rejecting two previous settlements he said unfairly shielded executive officers and directors from future lawsuits.

Under the third amended settlement, Hewlett-Packard is released from shareholder claims relating to the Autonomy acquisition in exchange for corporate governance reform.

The shareholders will not receive any money damages, but Breyer approved $8.6 million in attorneys' fees and expenses to plaintiffs' attorneys Cotchett Pitre & McCarthy and Robbins Rudman & Dowd.

Several derivative lawsuits ensued after Hewlett-Packard wrote down $8.8 billion from its $11.7 billion 2011 acquisition of Autonomy, a United Kingdom-based software company.

Shareholders said they were the victims of inaccurate and misleading financial statements. Hewlett-Packard claimed it was the victim of fraud, accusing Autonomy of "accounting improprieties."

"The parties filed a third amended settlement ... which revised its predecessor in two significant ways: by limiting the scope of the releases to Autonomy-related claims, and by extending a set of corporate governance reforms to cover both HP entities that will result from a planned division that was announced in October 2014," Breyer wrote in his 21-page order.

The reforms include new due diligence rules for mergers, creation of a senior executive-led risk management committee and modification of board-level oversight of mergers and acquisitions.

A final approval hearing is set for July 24 in San Francisco.

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