Article

HP/Compaq merger vote looms

Kevin Komiega

Next week shareholders from Hewlett-Packard Co., and Compaq Computer Corp., will put an end to all the speculation and anticipation and decide the fate of the proposed merger of the two companies.

Months of letter writing, press releases and press conference between the two companies and dissident shareholders will come to a head with the decision ultimately falling to HP's, Palo Alto, Calif., and Houston based Compaq's respective shareholders.

Meanwhile, HP's namesake continues his campaign against the merger, claiming that a number of stockholders -- representing more than 18% HP's shares -- are opposed to the merger.

In a letter on the anti-merger website

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VotenoonHPCompaq.com, Walter B. Hewlett stated his belief that a merger with Compaq will significantly diminish the value of Hewlett-Packard stock.

"We strongly recommend that you vote against the proposed transaction. The future of Hewlett-Packard is in [the shareholders'] hands and we believe that future will be best served without the burden of acquiring and integrating Compaq," stated Hewlett.

The upper management of both companies has gone back and forth with Hewlett numerous times in the past few months by sticking to their proverbial guns and pressing on with the merger.

Compaq's board of directors stated that the merger is well worth the effort and that its employees, shareholders and customers will be better served in the long term.

The HP leadership has shuffled its top 20 shareholders to the forefront of the fray in support of the deal -- including Board Member, former chairman and retired executive vice president, Computer Products Organization, Richard A. Hackborn.

In a letter to HP shareholders on Monday, Hackborn said a rejection of the merger would bode well for competitors and not for HP.

You can vote for the merger with Compaq, and preserve the legacy so many of us worked so hard to build, he wrote. Or you can vote against a thorough and deliberative process, and send us back to the drawing board. Either way, you can be sure of one thing: our competitors are not going to wait around for us to decide, stated Hackborn.

With a green light from the Federal Trade Commission and a nod from industry advisory firm Institutional Shareholder Services Inc., in hand, CEOs Carly Fiorina and Michael Capellas are hoping the best laid plans of Compaq's and HP's management will be given the go-ahead.

According to the latest SearchStorage poll, in which respondents were asked how they would vote if they were shareholders, 52% of respondents said they would vote no on the merger, while 42% would give it a go-ahead; 6% were undecided.

HP's shareholders will vote on March --> , and Compaq's vote will take place the following day, March 20.

Let us know what you think about the story, e-mail Kevin Komiega, assistant news editor

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