February 5, 2002 12:35 PM PST

HP shareholders to vote March 19

Hewlett-Packard announced Tuesday that it has set a date for its shareholders meeting on its proposed mega-merger with Compaq Computer.

Shareholders will cast their votes March 19 at the Flint Center in Cupertino, Calif. Investors who held HP stock as of Jan. 28 will be eligible to vote.

The long-awaited vote is expected to bring sweeping changes to HP, whether or not the deal goes through. The $24 billion arrangement, which would be the largest technology merger in history, would dramatically consolidate the PC industry and significantly alter HP's business operations, as it seeks to merge two huge companies.

Should the deal fail to garner enough votes to pass, analysts and sources familiar with the company say, it's likely HP CEO Carly Fiorina would resign, along with other executive team members and some board members.

The pending vote will end the contentious proxy battle between Walter Hewlett, a dissident HP board member and son of co-founder William Hewlett, and the rest of HP's directors and management. But it's unlikely the decision will end the ill will that has ripped through the fabric of HP's board.

Hewlett announced Tuesday that he has begun sending proxies to investors, asking them to vote their shares against the deal.

"HP is a strong company. HP is not in crisis. Don't bet the company on the Compaq transaction," Hewlett stated in his letter to shareholders. "It would be a mistake to become the world's largest commodity computing company, more than doubling HP's exposure to the troubled PC business. That would be a crisis."

Hewlett has also expressed concern that the lucrative printing business could be marginalized through the merger and that large mergers have a low success rate.

HP, however, has stressed its need to bolster its enterprise computing business and expand its consulting capabilities, all in the hope of becoming a one-stop shop for corporate customers--one that could rival IBM.

see special coverage: Big iron: HP to buy Compaq The company will need to capture more than 50 percent of shares voted to pass the deal. Although no opposition has been raised among Compaq's shareholders, that company faces a different challenge in securing enough votes. Compaq is required to have more than 50 percent of its outstanding shares voted in favor of the deal to approve it. A shareholder who doesn't vote is counted as casting a "no."

Compaq is scheduled to hold its special shareholders meeting at the Wyndham Greenspoint Hotel in Houston, the day after the HP vote. The meeting is scheduled for noon PST.

Hewlett, his two sisters and a family trust and foundation plan to vote against the deal. Hewlett announced in November that he would publicly oppose the merger and has since been joined in that effort by David Woodley Packard, son of co-founder David Packard, and his Packard Humanities Institute and the David and Lucile Packard Foundation. The Hewletts and Packards represent more than an 18 percent stake in the company.

Fiorina, speaking at the Goldman Sachs Technology Investment Symposium in Palm Springs, Calif., Monday, said HP was gaining support from institutional investors.

"Having spent weeks and months with institutional shareholders, we have a very good idea of where people are, and the level of support for this merger has been growing, and it is in our judgment more than sufficient to win a positive shareholder vote," Fiorina said.

But Hewlett described Fiorina's statements as "clearly false."

"We are meeting with investors, and what we are hearing is clearly contrary to her assertions," Hewlett said in a statement. "We believe that HP's statement could only be motivated by an intention to mislead the market."

HP has received public support from institutional investor Alliance Capital, which holds roughly 1 percent of the company's shares. Matrix Asset Advisors has stated public opposition to the merger.

One of the most eagerly awaited public statements from a representative of institutional investors has yet to arrive. Institutional Shareholder Services, which has been hired by a number of investors to advise them on how to vote on the pending merger, has said it plans to make its recommendation public within 17 to 20 days before the HP and Compaq shareholder meetings.

In the meantime, HP has received SEC approval of the contents of its final proxy. The companies still await regulatory approval from the Federal Trade Commission.

 

Join the conversation

Add your comment

The posting of advertisements, profanity, or personal attacks is prohibited. Click here to review our Terms of Use.

What's Hot

Discussions

Shared

RSS Feeds

Add headlines from CNET News to your homepage or feedreader.