HPE suffered £730 million loss in Autonomy deal with Mike Lynch, UK court rules

More than a decade after Hewlett Packard Enterprise’s (HPE) troubled $11 billion acquisition of Autonomy, a London judge has ruled the company lost around £730 million in the deal.

The court found that financial misstatements at Autonomy inflated the firm’s value ahead of the 2011 sale.

The decision marks a major development in one of the tech industry’s most drawn-out corporate disputes, with the ruling focused on damages rather than rehashing liability, which had largely been established in a 2022 judgment.

How one of biggest tech deals in the UK turned soar?

When HP bought Autonomy in 2011 for $11.1 billion, it was pitched as a bold move to reposition the company in high-margin software, complete with a 79% premium that raised eyebrows across the tech world.

The deal, one of the UK’s biggest tech acquisitions at the time, was widely seen as overpriced and fraught with risk.

Less than a year later, the optimism collapsed.

HP took an $8.8 billion writedown on the deal, blaming the bulk of the loss on “serious accounting improprieties” at Autonomy.

The company accused Autonomy’s leadership, co-founder Mike Lynch and CFO Sushovan Hussain of inflating financials through questionable accounting and misleading HP and its shareholders.

The developments spooked the investors, and HP’s stock tanked to decade lows.

Lynch, for his part, rejected the allegations. He maintained that Autonomy’s books were in order and said the real problem lay with HP itself, pointing to a bungled integration and deep-seated dysfunction within the company.

Tragic turn

The fallout from the Autonomy deal sparked years of investigations and courtroom battles in both the UK and the US.

In Britain, Hewlett Packard Enterprise argued it had “substantially succeeded” in showing that Mike Lynch and Sushovan Hussain had misrepresented Autonomy’s financial health ahead of the sale.

Lynch’s sudden death in August 2024, when his yacht tragically sank off the coast of Sicily, brought a somber turn to the long-running saga.

But it didn’t bring closure. HPE made clear that it would press on with legal action against his estate, determined to pursue what it sees as a case of corporate fraud that cost the company hundreds of millions.

Damages lower than sought

After one of the longest commercial trials in English legal history, Justice Robert Hildyard ruled that Mike Lynch and Sushovan Hussain were civilly liable for fraud.

The court found that Autonomy had improperly recognized revenue and misrepresented itself as a “pure software company,” when in fact, it was heavily involved in hardware reselling and engaged in questionable deals to artificially boost its quarterly numbers.

While HPE had initially gone after as much as $5 billion in damages, the judge ultimately pegged the company’s actual losses from the Autonomy acquisition at around £730 million, significantly lower than what HP had claimed in the public eye.