ISS recommends investors support HP-Compaq merger
SAN FRANCISCO, March 5 (Reuters) - A key adviser to big investors on Tuesday recommended shareholders support Hewlett-Packard Co.'s (NYSE:HWP - news) bitterly contested acquisition of Compaq Computer Corp. (NYSE:CPQ - news), giving a much-needed shot in the arm to the proposed $22 billion union.
With about 20 percent of HP's shares already lined up against the deal -- including those of the Packard Foundation and Walter Hewlett, son of the company's co-founder -- Institutional Shareholder Services' support was viewed as critical to the merger.
Walter Hewlett has led a vigorous campaign to kill the merger, claiming it would saddle HP with a low-margin personal computer maker. HP Chief Executive Carly Fiorina counters that the deal, the largest computer merger in history, is crucial to HP's survival and would create a technology powerhouse to rival IBM Corp. (NYSE:IBM - news).
Analysts expect 10 percent or more of HP shareholders -- including index funds and Barclays Global Investors, whose CEO sits on the HP board -- to follow the Bethesda, Maryland-based ISS's advice when casting their votes. Other fund managers have said they also will give the firm's opinion serious weight.
ISS advises some 700 funds how to vote in proxy battles, and many of its clients are obligated because of the structure of their funds or potential conflicts of interest to follow ISS advice. HP shareholders vote on the deal in a March 19 meeting, and Compaq will consider the merger a day later.
Prior to the announcement, HP shares ended up 4 cents at $20.59 and Compaq shares were down 7 cents at $10.58, both on the New York Stock Exchange. |
