Hewlett Packard Enterprise Co. plans to proceed with its civil lawsuit against the estate of British technology entrepreneur Mike Lynch, multiple U.K. publications reported today.
Lynch perished last month when the Bayesian, a superyacht on which he was staying, sank off Sicily during a storm. Six other people including his daughter Hannah also lost their lives. Fifteen people, among them Lynch’s widow Angela Bacares, were rescued from the wreckage.
In 1996, Lynch co-founded Autonomy Corp., a software provider that went on to become one of the U.K.’s largest tech firms. HP Co., the predecessor company to HPE, bought Autonomy in 2011 for $11.7 billion. The deal valued the software maker at a 78% premium to its stock price.
A few months after the transaction closed, HP wrote off more than two-thirds of Autonomy’s value. The former company alleged that the loss was the result of “serious accounting improprieties” and “outright misrepresentations” on Autonomy’s part. The accusations led to lawsuits from HP, and later its successor company HPE, against multiple members of Autonomy’s leadership team including Lynch.
This past July, a San Francisco court acquitted the executive in a fraud trial focused on the acquisition. Prosecutors accused Lynch of inflating Autonomy’s revenue. It’s believed Lynch was aboard the Bayesian to celebrate his acquittal.
About two years before the July verdict, the U.K.’s High Court ruled against Lynch in a separate case brought by HPE over the Autonomy deal. The value of the damages to be paid has not yet been decided. HPE signaled today that it intends to continue the litigation.
The company said in a statement that “a damages hearing was held in February 2024 and the judge’s decision regarding damages due to HPE will arrive in due course. It is HPE’s intention to follow the proceedings through to their conclusion.”
HPE had originally sought damages of up to £4 billion, which equals about $5.26 billion. After the judge presiding over the case ruled that the size of the payout would be “substantially less,” the company lowered its claim to £3 billion. HPE has reportedly spent more than £50 million on legal fees to date.
According to The Register, it’s believed that the company can’t drop the case without putting itself at risk of a class-action lawsuit from shareholders. City A.M., in turn, reported that HPE would also find it legally challenging to ask that the damages awarded to it be lowered. Such a decrease can reportedly only be applied if the company establishes a “reasonable business case” for requesting it.
Four years after it bought Autonomy, HP split into two companies: HPE and HP Inc., which generates most of its revenue from selling personal computers. The products in Autonomy’s software portfolio were divided between them. HPE and HP subsequently sold those products to Micro Focus International plc and OpenText Corp., respectively, in two separate deals.
OpenText acquired Micro Focus last year. The transaction reunited Autonomy’s software portfolio, which includes applications for use cases such as improving the efficiency of contact centers and managing business documents.