Hewlett-Packard escalates its battle with Michael Lynch

Hewlett-Packard escalated its more than two-year-old battle with Michael Lynch, suing the Autonomy co-founder, as well as a former chief financial officer, for $5.1 billion.

Hewlett-Packard has maintained that before it agreed to buy the Cambridge, England-based software company for $10 billion in 2011, Mr Lynch and other managers gave an overly optimistic representation of its financial health.

The suit was filed in London on Monday, about two months after UK prosecutors dropped a fraud probe into the deal.

“HP can confirm that, on March 30th, a claim form was filed against Michael Lynch and Sushovan Hussain alleging they engaged in fraudulent activities while executives at Autonomy,” a spokeswoman for Hewlett-Packard said in a statement.

The 49-year-old Lynch and Hewlett-Packard have been at odds since 2012, when the company wrote down $8.8 billion connected to the acquisition and said more than $5 billion was the result of accounting improprieties by Autonomy.

Autonomy’s former management team responded to the lawsuit by saying they will counter-sue Hewlett-Packard for more than £100 million pounds ), according to a statement : “The former management of Autonomy announces today they will file claims against HP for loss and damage caused by false and negligent statements made against them by HP on 20 November 2012 and in HP’s subsequent smear campaign.”

The UK's Serious Fraud Office (SFO) in January dropped its probe into the takeover after finding "insufficient evidence for a realistic prospect of conviction," the agency said at the time.

The US Department of Justice is still investigating, and the SFO said it gave its files to the US authorities.

- Bloomberg