Posted on 04/17/2002 4:26:19 PM PDT by Tumbleweed_Connection
Hewlett-Packard Co. shareholders appear to have narrowly approved the company's bitterly contested $20 billion acquisition of Compaq Computer Corp., an independent proxy certifying firm said Wednesday, though the result still is not final.
After spending more than three weeks going over the proxies, IVS Associates of Newark, Del., told HP its preliminary count showed that 837.9 million shares, or 51.4 percent of those cast, were voted in favor of the Compaq deal, with 792.6 million, or 48.6 percent, against it.
That supports HP chief Carly Fiorina's claim immediately after the March 19 vote that shareholders had approved the deal by a "slim but sufficient margin." Dissident director Walter Hewlett, who led the campaign against the deal, had maintained the vote was too close to call.
"We are gratified the preliminary vote tally validates that HP shareowners voted the majority of their shares in support of the merger," Fiorina said in a statement. "We are eager to put this difficult period behind us and look forward to doing business as the new HP."
IVS's tally - which it disclosed to HP and Hewlett but did not announce publicly - was grueling because shareholders can change their votes as many times as they want, with only the last proxy counting. The result could take at least another week to become official because Hewlett will demand a recount and then each side can challenge certain ballots, a process sometimes called "the snake pit."
In addition, Hewlett is asking a Delaware judge to overturn some or all of the vote, partly alleging that HP threatened to take business away from Deutsche Bank unless its investment division switched its position on 17 million shares at the last minute. Hewlett also claims HP misled investors about the progress of its merger integration plans.
HP has denied wrongdoing. A trial on Hewlett's lawsuit is scheduled to begin Tuesday in Wilmington, Del.
Separately, HP disclosed this week that the Securities and Exchange Commission and federal prosecutors in New York also are investigating HP executives' contacts with big investors in the days before the vote.
If HP's lead - 45 million shares, or 2.8 percentage points - holds up, this will go down as one of the closest corporate elections ever to involve such high-profile companies, said Charles Elson, director of the Center for Corporate Governance at the University of Delaware.
"It's a pretty tight margin, and I would not take that as a mandate by management," he said. "You can't say anything definitive when it's that close."
In any case, he added, the tally is all but meaningless for now because of Hewlett's lawsuit against the company.
"The issue is, was the vote process corrupted by this alleged vote-buying?" he said. "This margin is irrelevant."
The leaders of Palo Alto, Calif.-based HP and Houston-based Compaq say merging will create a technology powerhouse rivaling IBM Corp., with complete packages of hardware, software and services for corporate clients.
Hewlett believes the deal, which would be the biggest in the industry's history, would dilute HP's profitable printing division and unnecessarily increase its exposure to the weak personal-computer market.
His fight against the deal was one of the most acrimonious boardroom battles in years, pitting him and other heirs of the company's co-founders - who control a combined 18 percent of HP stock - against Fiorina and her management team at the 63-year-old Silicon Valley institution. Hewlett was not renominated for another term as director after suing the company over its merger wrangling.
In a statement released on behalf of the Hewlett family trust, Hewlett's advisers noted that HP's winning margin was indeed narrow and reiterated that the fight is not over.
HP shares rose 5 cents to close at $18.65 on the New York Stock Exchange, where Compaq gained 28 cents, or 2.7 percent, to $10.68. HP shares rose to $18.75 and Compaq stock jumped to $11.16 in extended trading after the vote was announced.
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