March 20, 2002 6:00 AM PST

Next up: The vote at Compaq

Compaq Computer shareholders are widely expected to approve the proposed merger with Hewlett-Packard on Wednesday, in what should be a relatively tame meeting compared with HP's a day earlier.

See special coverage: A Fight to the Finish Compaq shareholders are seen as more favorable to the deal, in part because HP is paying a premium to acquire the Houston-based computer maker, and in part because few Compaq shareholders have vocally opposed the plan.

Compaq shareholders will host a shareholder meeting at 2 p.m. CST Wednesday at the Wyndham Greenspoint Hotel in Houston to approve or reject the merger.

With no outspoken family members trying to scuttle the deal, the Compaq vote is expected to proceed quickly, though 100 percent approval is unlikely. Some of HP's large institutional investors opposing the merger own shares in both companies, and many workers who own shares oppose the deal because of expected layoffs.

On Tuesday, HP CEO Carly Fiorina claimed that the companies' proposed merger won approval by a "slim but decisive" margin, but Walter Hewlett, leader of the opposition, wasn't ready to concede. Indeed, many Wall Street analysts on Wednesday used Yogi Berra's "It ain't over till it's over" mantra to describe the HP vote.

"We think it will take one to three weeks before an official count is complete," Prudential Securities analyst Kimberly Alexy said in a research note. "Late in the process, some very large shareholders came out in favor of the deal. This may have tipped the vote in favor of the merger."

Many Wall Street analysts who were opposed to the deal maintained their positions and argued that the merged company would face numerous challenges if the deal were to go through.

Compared with the HP vote drama, Compaq's meeting may turn out to be anticlimactic.

Compaq spokeswoman Stacey Paull wouldn't estimate the number of likely attendees, but the conference rooms at the hotel fit a maximum of 1,000 people. The Compaq meeting, which will include a speech by CEO Michael Capellas, is scheduled to last roughly an hour. The majority of Compaq shareholders have already voted by mailing proxy statements or voting by e-mail.

Although many analysts call the Compaq vote a done deal, approval from its shareholders must also pass a higher hurdle than approval from HP shareholders.

At least 50 percent of all Compaq shareholders must approve the deal for it to go through; those who don't vote at all are essentially voting against the deal. By contrast, only 50 percent of HP voters who cast ballots had to approve the deal for it to go through on the HP side. Those who didn't vote had no direct impact on whether the merger would pass.

 

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