Battle Over HP-Compaq Merger Goes To Court

By Agence France-Presse The battle over the merger of Hewlett-Packard Co. and Compaq Computer Corp. moved to court March 28 as family heir Walter Hewlett filed suit alleging improper conduct by HP management to sway a shareholder vote. Hewlett-Packard quickly dismissed the allegations as "baseless." Hewlett, an HP board member who opposes the merger, alleged in his complaint that HP management "obtained a significant number of votes [for the merger] by improper means." The suit cited "enticements and coercions" to win the approval of proxies by Deutsche Bank, which owned at least 25 million voting shares. It alleges that Deutsche Bank had initially decided to oppose the merger, but changed its stand a day before the vote. A few days before the HP vote, Deutsche Bank reportedly joined other investment banks in forming a $4 billion credit facility for Hewlett-Packard. "Deutsche Bank was led to understand that if it did not switch its votes to favor the proposed merger, its future business dealings with HP would be jeopardized," the suit said. Deutsche Bank had no immediate comment on the suit. The complaint asks a judge to order that shareholders defeated the merger plan on March 19, or to invalidate the vote and order a new vote. HP denied any irregularities in the voting. "We find it regrettable that Mr. Hewlett has chosen to resort to baseless claims without regard to the impact of his false accusations on HP's business reputation and employees," HP said. The move to court is the latest chapter in a bruising shareholder battle at the Silicon Valley technology giant. HP officials claim the merger is the road to a brighter future, while critics, led by Hewlett, contend the merger will shift the focus of the Palo Alto, Calif., firm from the more profitable printing and imaging sector to the struggling PC market. Hewlett-Packard officials contend that shareholders approved the hotly contested merger, but the official tally is not expected for several weeks, and opponents say the vote was too close to call. Houston-based Compaq said its shareholders approved the plan by a wide margin. Hewlett, who owns a major HP stake through The William R. Hewlett Revocable Trust, said he was asking the Delaware Chancery Court for "expedited proceedings so that these very important issues can be resolved as soon as possible." But the unofficial HP results will have to be verified by the vote counting firm, IVS Associates, which specializes in the normally obscure task of counting votes cast by shareholders. Executives of the two firms, however, are already making plans for the merger, including laying off as many as 15,000 employees that could be announced next week. Copyright Agence France-Presse, 2002

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.