UPDATE 1-Compaq board sees HP deal winning shareholder approval
December 13, 2001 5:46:00 PM ET
HOUSTON, Dec 13 (Reuters) - Compaq Computer Corp.'s (CPQ) board of directors said on Thursday it believes its deal to be acquired by Hewlett-Packard Co. (HWP) will win shareholder approval despite opposition by the Hewlett and Packard families.
"We are confident that over the coming months, the shareholders of both companies will recognize the value of the merger and give their approval," Compaq's board said in a letter to Walter Hewlett, a son of one of the founders and a Hewlett-Packard board member.
"The Board of Directors of Compaq has carefully analyzed the short-term and long-term impact as well as the strategic implications of the proposed HP-Compaq merger," the company said. The letter was Compaq's response to a letter sent on Wednesday by Hewlett, a key critic of the proposed $22.8 billion deal.
In his letter, which came one month after he first spoke out against the deal, Walter Hewlett, a son of one of the founders and a Hewlett-Packard board member, said the merger would likely be rejected if there were a shareholder vote.
There is "enormous unhappiness" about the deal and a "very high probability" that it would be defeated if it came to a stockholder vote, Walter Hewlett said in a Dec. 12 letter to the boards of Hewlett-Packard and Compaq.
Compaq, for its part, said it was let down by the push against the deal by the Hewlett and Packard families, triggering a fight for shareholders' support.
"We are disappointed that both the Hewlett Foundation and the Packard Foundation have decided to oppose the transaction. We continue to believe that the combination of HP and Compaq will provide better market coverage, significant synergies and higher profits than either company would achieve on its own. These benefits will lead to the creation of long-term value for both Compaq and HP shareholders," Compaq's board said in the letter.
"On that basis, we believe that this merger is well worth the effort and that our employees and shareholders and customers will be better served in the long term," the letter added.
No date has yet been set for a vote by shareholders, but Merrill Lynch analyst Steven Fortuna said in a research note on Thursday that he expected the vote to take place in early March. The companies also are waiting for regulatory approval in the United States and Europe.
"The Board of Directors of Compaq is pleased with the execution of the company's present strategy and with its market momentum. We intend to maintain this positive momentum and bring an even stronger Compaq to the merger," Compaq's board wrote. REUTERS
© 2001 Reuters
news.moneycentral.msn.com |
