HPE looks set to face a lawsuit claiming it misled investors about employee layoffs relating to the spin-off of its enterprise services business, after a judge declined to dismiss the case.to merge it with rival technology consulting operation Computer Sciences Corporation , in a move that would lead to the creation of DXC Technology.
The case asserts liability against HPE and DXC, and “certain current and former officers and directors of HPE, DXC, and CSC” under the US Securities Act of 1933.[PDF], the plaintiffs claim that documents relating to the merger promised “first-year synergies of approximately $1.0 billion post-close, with a run rate of $1.
But the filing states that the merger literature downplayed the cost reduction part of the turnaround plan, and that it claimed the post-merger DXC would be able to attract and retain highly motivated people with the skills necessary to serve their customers.”
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