FTC Expected to Approve H-P's Acquisition of Compaq Shortly, Sources Say
By: John R. Wilke, Staff Reporter of The Wall Street Journal
NEW YORK -- The Federal Trade Commission is expected to announce its approval of Hewlett-Packard Co .'s proposed acquisition of Compaq Computer (NYSE: CPQ)
Corp., according to people briefed on the decision.
The commission vote Wednesday was unanimous, and it is unconditional, requiring no divestitures, these people said. The approval is another boost for the merger plans of Hewlett-Packard (HWP), which is battling opposition from dissident holders. On Tuesday, a major investor and advisory group came out in favor of the deal.
In its investigation, the five-member FTC had weighed whether to demand asset divestitures in the market for high-end computer servers, where the two companies have some overlapping product lines. But officials ultimately decided against such measures, those briefed on the decision said.
Late Tuesday, Institutional Shareholder Services Inc., the proxy-advisory company whose clients own a large block of H-P's shares, endorsed the computer company's plan to buy Compaq (CPQ), significantly boosting chances that the $ 22.8 billion deal will go through.
"At the end of the day, we were comfortable H-P management had taken steps to realize the long-term strategic value from this merger," said senior ISS analyst Ram Kumar, who helped to write the much-anticipated ISS decision.
A combined H-P and Compaq would have strong strategic and financial prospects, Mr. Kumar said. ISS said it will issue its recommendation to Compaq shareholders on how they should vote their shares later this week. H-P shareholders vote March 19 , a day before Compaq shareholders vote.
The recommendation by ISS, of Rockville, Md., is a shot in the arm for H-P Chief Executive Carly Fiorina, whose efforts to win over investors have come to resemble a brass-knuckle political campaign. The news also is a big blow for dissident H-P director Walter Hewlett, the co -founder's son and major shareholder who is soliciting proxies to defeat the acquisition. Members of the Packard family also oppose the deal.
Write to John R. Wilke at john.wilke@wsj.com |
