USA TODAY -
by: howardroarklives 03/25/02 11:59 am
Msg: 113288 of 113306
03/24/2002 - Updated 10:15 PM ET
H-P shareholder switched vote to back merger
By Jon Swartz, USA TODAY
SAN FRANCISCO — Deutsche Asset Management, a big Hewlett-Packard shareholder, switched most of its shares at the last minute in support of H-P's $20 billion acquisition of Compaq Computer Tuesday — just days after its investment banking parent company helped close a $4 billion credit line for H-P, USA TODAY has learned.
Deutsche Asset Management, an investment arm of Deutsche Bank, cast 17 million shares, or about 1% of H-P shares, for the merger, according to a person with knowledge of the vote. It was the only known last-minute switch by a hefty institutional investor.
It may have been crucial. Hewlett-Packard claimed a "slim but sufficient" victory. Merger foes, led by board member Walter Hewlett, say the margin is likely to be 0.5% to 2%. Hewlett refuses to concede. A final tally may take weeks.
A Deutsche Asset Management spokeswoman declined comment on the vote. She said she was unaware of the credit line. It closed March 15, four days before the shareholder vote. Deutsche Bank was named co-arranger with Royal Bank of Scotland. The deal replaced a $1 billion arrangement that would have expired in April.
J.P. Morgan Chase and Salomon Smith Barney, who are also H-P shareholders, were lead arrangers. Parts of their companies, too, owned H-P shares. It is unknown how they voted.
A Deutsche Bank spokesman didn't return calls.
H-P says the vote and the debt deal had nothing to do with each other. And it says there is a "Chinese Wall" separating the actions of investment banking and equity operations.
H-P and Deutsche Bank have been business partners for years. Last year, H-P used Deutsche to arrange a $658 million debt offering. The recent $4 billion debt deal has been in the works for months.
"We earned these votes through hard work and merit," H-P spokeswoman Rebeca Robboy says.
The deal has raised eyebrows among financial analysts. "It may look and smell funny," says analyst Mark Specker of SoundView Technology Group.
"It looks like Deutsche pulled the deal out," says David Katz, a money manager at Matrix Asset Advisors. It came out against the deal last year.
H-P's shareholder meeting was delayed for half an hour. H-P said that was so some attendees could find parking. Merger opponents say the delay gave H-P more time to lobby institutional investors and tip the vote in H-P's favor. "You can be sure there was some last-minute arm-twisting," says Gartner Dataquest analyst Todd Kort. |
