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HP acquires Autonomy

Hewlett-Packard, an American computer maker, that bought Autonomy, an English software company in 2011, wrote off $8.8 billion of the acquisition value, possibly less than a year later the deal was closed between the two companies. The write off decision lead to war of words between the two groups with HP sacking autonomy founder chairman, Mike Lynch and also its own Chief Executive, Leo Apotheker, who was heading HP at the time of entering the deal. While HP claims that it was the accounting misrepresentation in Autonomy’s books that lead to write down of the acquisition value, Mike Lynch of Autonomy claims that everything was fine with the company’s books and the value of the company was lost because of mismanagement by the HP’s top management.
The auditors at both the companies had a special role to play. Deloitte, which audited Autonomy found no accounting shenanigans. Hewlett Packard, which is audited by Ernst and Young, hired KPMG to perform due diligence in connection with the acquisition, and even at this time, no issue was found in Autonomy’s books. Finally, HP hired PWC and claimed that the auditing firm found serious accounting flaws and misrepresentation in Autonomy’s books, with HP’s CEO Meg Whitman stating that it will file suit against Mike Lynch and Leo Apotheker and auditing firm Deloitte for causing losses to the company.
Lawsuits were also filed against HP by its shareholders where the claimant claimed that before closing its deal with Autonomy, HP was actively seeking to withdraw its offer courtesy negative response from the market to the HP’s offer value to Autonomy” The company’s lawyers after the lawsuit was filed in the California courts, it had reached settlement with its shareholders, subject to approval by a US judge.

Works Cited

Ahmed, Richard Walters and Murad. HP weighed backing out of acquiring Autonomy. 4 September 2014. 12 March 2015 <http://www.ft.com/intl/cms/s/0/e11e5b1c-3374-11e4-85f1-00144feabdc0.html#axzz3UCHXeyNa>.
Norris, Floyd. A clash of auditors at HP Deal. n.d. 12 March 2015 <http://www.nytimes.com/2012/11/30/business/auditors-clash-in-hp-deal-for-autonomy.html?_r=0>.