Meg Whitman
Photograph by Richard Drew — AP
By Heather Clancy
April 2, 2015

Meg Whitman probably could use an aspirin, but it looks like the cure for one chronic headache is nearer.

I’m referring to Hewlett-Packard’s disastrous buyout of Autonomy, which took place four long years ago under the short-lived reign of then-CEO Léo Apotheker.

HP paid approximately $10 billion for Autonomy in 2011 but wound up writing down $8.8 billion for what its management has routinely described as “accounting improprieties.”

The lingering question: why wasn’t this caught beforehand, especially for a deal of this size? The resulting shareholder litigation against HP directors, management and advisors continues to be a legal distraction when all of the above should be laser-focused on strategizing the company’s big split.

The good news is that HP is now poised to move on, with far better governance policies in place to guide both new organizations.

The catalyst: the mid-March preliminary approval of an agreement that will settle the Autonomy-related lawsuits. Under the revised deal (the first two were rejected as too lenient), the claims will be dropped. In exchange, HP has agreed to a number of new governance practices—which will apply to both companies after the split.

Here’s the summary of the changes, including the creation of a risk management committee:

“The governance revisions provide for greater involvement in the [mergers and acquisitions] process by the finance and investment committee, as well as the technology committee of the board. The due diligence process will be enhanced, with additional training for persons taking part in the company’s due-diligence efforts and due-diligence plans subject to greater oversight. There will be additional and enhanced oversight for larger transactions by key members of the management, who will form a newly chartered risk management committee. And there will be periodic board- and management-level review of the company’s processes for evaluating, reviewing, and approving mergers and acquisitions, including the criteria for considering potential M&A partners.”

HP is also on the hook for at least $8.8 million in legal fees. The hearing to finalize the agreement is scheduled for July 24 in San Francisco.

Of course, HP denies it did anything wrong. Still, the deal must offer some sense of vindication for HP CFO Cathie Lesjak, who opposed buying Autonomy in the first place.

By the way, while the settlement prevents shareholders from suing Autonomy’s former management, it leaves HP free to pursue them.

Early this week, HP lawyers in London did just that, filing a claim that seeks approximately $5.1 billion from former Autonomy CEO and co-founder Michael Lynch and former finance director Sushovan Hussain. Lynch plans a $149 million countersuit, claiming personal losses from what he describes as ongoing “smear campaign.”

Several criminal investigations by U.S. and U.K. authorities are still ongoing, although Britain’s Serious Fraud Office closed its probe of the deal in mid-January, saying there wasn’t enough evidence for a conviction.

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