The New York Budgets

Tag: Hewlett Packard Enterprise Company (HPE)

  • HPE is owed nearly $1 billion by the estate of U.K. tycoon Mike Lynch, who died after his luxury yacht sank

    HPE is owed nearly $1 billion by the estate of U.K. tycoon Mike Lynch, who died after his luxury yacht sank

    Hewlett Packard is owed nearly $1 billion by the estate of the late Mike Lynch and his former business partner over HP’s acquisition of their British software firm Autonomy, London’s High Court ruled on Tuesday.

    HP was seeking to recoup its losses from Lynch – who died last year when his luxury yacht sank off Sicily– and Autonomy’s former chief financial officer, Sushovan Hussain.

    The technology giant welcomed Tuesday’s ruling, which said HP was owed $944 million in relation to the difference between the price it paid and the price it would have paid for Autonomy had it known its “true financial position.”

    In addition, HP is entitled to another $47.5 million for losses suffered by Autonomy group companies in relation to hardware sales and other transactions.

    A spokesperson for Lynch’s family released a statement, which the spokesperson said Lynch prepared last year before his death, having seen a draft of Tuesday’s long-delayed ruling. 

    Lynch said in the statement that the judgment showed HP’s initial claim for up to $5 billion was a “wild overstatement.”

    A further hearing will take place in November, to determine any applications for permission to appeal and how damages to be paid will be divided between Lynch’s estate and Hussain, with whom HP settled earlier this year.

    HP sued Lynch and Hussain in 2015, accusing them of masterminding an elaborate fraud to inflate the value of Autonomy, which HP bought for $11.1 billion in 2011.

    The deal spectacularly unraveled in less than a year and HP wrote down Autonomy’s value by $8.8 billion within a year before bringing a $5 billion lawsuit against Lynch and Hussain in London.

    ‘Considerably less’

    The High Court ruled in HP’s favor in 2022, though a judge said the company would receive “considerably less” than $5 billion.

    Lynch, once hailed as Britain’s answer to Bill Gates, had always maintained his innocence and blamed HP for failing to integrate Autonomy into the company.

    He was acquitted of criminal charges over the deal in the US and had intended to appeal the High Court’s 2022 ruling, a process which was on hold pending Tuesday’s decision on damages.

    Judge Robert Hildyard ruled that HP would have paid 23 pounds a share, rather than the 25.50 pounds it actually paid, when it bought Autonomy.

    HP had been seeking up to $4 billion, its lawyers said at a hearing last year.

  • Autonomy founder Mike Lynch loses appeal attempt against extradition to the U.S.

    Autonomy founder Mike Lynch loses appeal attempt against extradition to the U.S.

    Mike Lynch, the British tech billionaire and founder of software company Autonomy, has lost his legal battle in the UK to appeal his extradition to the United States, where he faces a criminal trial over Hewlett-Packard’s ill-fated $11 billion acquisition of his company in 2011.

    The UK High Court on Friday dismissed Lynch’s latest appeal, reaffirming the 2021 decision that allowed his extradition. The ruling marks a significant escalation in one of the most high-profile white-collar criminal cases involving transatlantic tech and finance sectors in recent memory.

    Hewlett-Packard (HP) acquired UK-based Autonomy in 2011 for $11 billion in a bid to transform its business through software innovation. But just a year later, HP wrote down the value of the acquisition by $8.8 billion, claiming that Autonomy had fraudulently inflated its revenues and misrepresented its financials. The deal, once hailed as a cornerstone of HP’s global strategy, instead became a costly and controversial blunder.

    The U.S. Department of Justice charged Lynch with 17 criminal counts, including conspiracy to commit wire fraud and securities fraud. Prosecutors allege that Autonomy’s accounting practices misled HP, resulting in a $5 billion overpayment. Lynch has denied any wrongdoing, asserting that HP mismanaged the integration and failed to understand Autonomy’s business.

    Legal Challenges and Extradition Battle

    Lynch’s legal team had argued that since Autonomy was a UK-listed company with operations, audits, and board oversight based in the UK, the case should be tried in British courts. His attorneys also cited that much of the alleged misconduct took place in the UK and that the Serious Fraud Office (SFO) had not ruled out pursuing charges domestically.

    But the High Court rejected these arguments, siding with U.S. prosecutors and emphasizing that the majority of Autonomy’s revenue came from the U.S., making it an appropriate jurisdiction. “The case should be prosecuted in the U.S. as most of Autonomy’s revenues came from the U.S.,” the judges wrote in their opinion.

    This decision means Lynch is now set to be extradited to California, where he will face a jury trial alongside evidence and witnesses previously examined in a related civil case.

    Lynch’s Dual Legal Battle

    In addition to the criminal trial, Lynch has already suffered a major defeat in the civil courts. In 2022, he lost a $5 billion civil fraud lawsuit brought by Hewlett Packard Enterprise (HPE)—a successor to HP following its 2015 corporate split. That case involved similar allegations and relied on many of the same witnesses expected to testify in the U.S. criminal trial.

    Autonomy’s former CFO, Sushovan Hussain, was previously convicted in the U.S. and is currently serving a five-year prison sentence after being found guilty of fraud in 2018.

    Lynch remains defiant. In a statement issued through a spokesperson, he said he was “very disappointed” with the ruling and criticized what he views as U.S. legal overreach into British jurisdiction. “The United States’ legal over-reach into the UK is a threat to the rights of all British citizens and the sovereignty of the UK,” he added.

    He confirmed he will consider further appeals, including to the European Court of Human Rights.

    The case has drawn intense scrutiny from business leaders, legal scholars, and market regulators on both sides of the Atlantic. It has become a cautionary tale for international mergers and acquisitions, especially those involving companies with complex cross-border financials and accounting systems.

    The HP-Autonomy saga has long haunted HP’s reputation and investor confidence. While HP Inc. (which now focuses on computers and printers) has distanced itself from the deal, HPE (Hewlett Packard Enterprise), which manages enterprise services and cloud infrastructure, has remained active in seeking legal recourse.

    Investors and corporate executives are closely watching Lynch’s criminal trial, which could influence future regulations on tech sector acquisitions, due diligence standards, and financial transparency in international transactions. Any developments may also affect investor sentiment toward UK-based tech firms involved in U.S. business deals.