Hewlett-Packard has begun talks with a shareholders’ group that sued the company and CEO Meg Whitman over the botched 2011 acquisition of the British software firm Autonomy about a possible settlement, sources familiar with the situation tell Re/code.
Lawyers for both sides of a shareholder derivative lawsuit* met for settlement discussions Tuesday in San Francisco, and talks are scheduled to continue through Thursday, sources said. HP declined to comment on the talks.
The shareholders group sued HP in 2012 in the US District Court for the Northern District of California for misleading statements about the financial health of Autonomy. HP paid $11 billion for the software firm, but later admitted that it overpaid for the company and wrote down the value of Autonomy by about $5 billion as part of a larger $8.8 billion write-down in late 2012.
The company has alleged that Autonomy’s prior management, including its former CEO Mike Lynch, engaged in a series of accounting improprieties that were intended to inflate its value ahead of the acquisition and has referred the matter to regulators in both the U.S. and U.K., who are investigating. Lynch has denied any improprieties.
Since 2011, some shareholders have wondered how HP could have missed so many problems at Autonomy before buying it without there being some opposition in board deliberations. While the acquisition was one of several actions that ultimately cost then-CEO Léo Apotheker his job, current CEO Meg Whitman was a member of HP’s board of directors and voted in favor of the acquisition. To this day she stands by the acquisition, but not the price paid.
In November, the judge in a related case, Charles Breyer, ruled that HP and Whitman will have to answer the allegations against them in court.
The plaintiffs in the case — all of whom are HP shareholders — allege that in her first days as CEO Whitman wanted to pull HP out of the deal she had previously voted in favor of as a director. If that’s the case, they’d like to know what prompted that, and what else she might have known about the state of Autonomy’s finances prior to the deal closing.
The shareholder suit is part of the long tail of unfinished business related to the Autonomy deal that has been dogging HP more than two years after it was closed. New revelations concerning how Autonomy accounted for certain loss-making hardware sales prior to its acquisition have raised questions about HP’s version of events.
HP has alleged that Autonomy had a habit of reselling computers at a loss near the end of its fiscal quarters in order to bolster its apparent financial performance. It also says that Autonomy used transactions it says were improper with third-party resellers to create the appearance of software license revenue. Lynch has denied all of HP’s allegations.
*Clarification: Sources familiar with the situation have since called to make it clear that the settlement talks underway relate only to a specific case, the shareholder derivative lawsuit, case number 12-06003 In re Hewlett Packard Shareholder Derivative Litigation, which was filed on Nov. 27, 2012. The settlement talks don’t apply to the shareholder class action lawsuits.
This article originally appeared on Recode.net.