Battle Lines Harden in Compaq Merger TIFF
Benjamin Pimentel
c.2001 San Francisco Chronicle
An influential Hewlett-Packard Co. director has resigned from the foundation headed by Walter B. Hewlett, son of one of the company's co-founders, who is urging the boards of both HP and Compaq Computer Corp. to scrap their planned merger.
HP director Richard Hackborn, a former HP chairman and a staunch supporter of the $22.3 billion deal, said he can no longer in good conscience serve as a board member of the William and Flora Hewlett Foundation because of Walter Hewlett's campaign to defeat the merger.
``Walter Hewlett's decision to wage an ill-advised proxy fight opposing HP's merger with Compaq deeply conflicts with my and the HP board's belief that the merger represents the very best way to deliver the value and growth HP's share owners and customers and employees deserve,'' he said in a statement.
Hackborn is credited with helping to build the Palo Alto company's highly successful printing business and is one of the firm's most respected veterans. He has also become one of the most outspoken of HP's board members in defending the deal.
A person familiar with Hackborn's decision to resign said Hackborn plans to speak out more against Hewlett's public efforts to scuttle the merger.
``Given that we have seen the way Walter Hewlett is operating, you'll likely see more resources put into ensuring that HP's message is fully communicated,'' said the person, who requested anonymity. Hackborn ``is willing to step forward to do this.''
Hewlett, his family, the Hewlett Foundation and David W. Packard, the son of HP co-founder David Packard, said last month that they oppose the deal. Last week, the David and Lucile Packard Foundation also came out against the merger.
But Hackborn said the Packard and Hewlett families have yet to present an alternative to the merger, which he believes will ``ensure vibrant healthy businesses and therefore protect jobs.''
``We have a plan that will work,'' Hackborn said. ``I have seen no plan from the heirs. Their opposition does not address any of the issues or opportunities of this company. Our plan secures HP's future. Standing still does not serve share owners or employees.''
Hewlett, the Hewlett Foundation's chairman, said in a statement that he regrets Hackborn's resignation.
But in a letter Wednesday to the boards of HP and Compaq, he also reaffirmed his belief that the merger will hurt the Silicon Valley firm and called for ``a speedy, mutual unwinding of this transaction.''
``There is enormous unhappiness about this transaction,'' he said. ``The handwriting is on the wall and it is clear. If the merger is brought forward for a vote, there is a very high probability that it will be defeated.''
By pursuing the merger, he warned, ``each company will misdirect time and energy, waste money, suffer degradation of employee morale, continue to confuse customers and delay refocusing on the steps necessary to maintain itself as an independent company.''
``Value is being lost here by both companies with each day that passes,'' he said.
HP dismissed Hewlett's letter, calling it ``an unsubtle attempt to prevent other shareholders from having their say,'' a company statement said.
``The truth is that the actions of Mr. Hewlett are the reason that uncertainty and concern are more heightened than they should have been,'' the company said.
Compaq's board of directors, which held a regularly scheduled meeting yesterday, said the board and the Houston company's management strongly disagree with Hewlett's conclusions.
In a letter to Hewlett, the board said it is ``confident that over the coming months, the shareholders of both companies will recognize the value of the merger and give their approval.''
HP's stock price dipped 74 cents to $21.07 Thursday. Compaq's stock price dropped 40 cents to $9.39. Standard and Poor's placed Compaq on credit watch Thursday, citing the uncertainty surrounding the merger. |
