HP's CEO testifies on her remarks before Compaq vote
By Caroline Humer
WILMINGTON, Del., April 25 (Reuters) - Hewlett-Packard
Co.<HWP.N> Chief Executive Carly Fiorina on Thursday conceded
in court that she told Deutsche Bank asset managers their vote
in favor of HP's plan to buy Compaq Computer Corp.<CPQ.N> was
of "great importance to our ongoing relationship."
Fiorina was testifying for a third day in a trial in which
Walter Hewlett, a son of an HP founder and dissident board
member, is seeking to throw out a March 19 shareholder vote in
favor of the $18 billion deal to buy Compaq.
Walter Hewlett contends Deutsche Bank <DBKGn.DE> asset
managers -- who had switched their votes and backed the merger
on the morning of the vote -- did so under pressure of losing
future investment banking business.
Walter Hewlett's lawyer Stephen Neal presented Fiorina with
a transcript of a conference call she and other HP executives
held to convince Deutsche Bank's asset management team to
change their stance and back the deal.
"This is obviously of great importance to us as a company
and it's of great importance to our ongoing relationship," the
transcript said. "We very much would like to have your support
here. We think this is a crucially important decision for the
company."
Fiorina, in a testy exchange with Neal, read from the
transcript and confirmed they were her words.
She later said she was trying to convey that she
appreciated Deutsche Bank's time and she hoped to work with
them in the future, pointing out the bank is a large customer
of HP.
Investors, who said the transcript lent weight to
allegations that she coerced Deutsche Bank into voting for the
deal, ran from the courtroom to adjust their positions in
Hewlett and Compaq's stock.
Deutsche Bank on Tuesday said it had been hired in January
as a "secondary" merger adviser to Hewlett-Packard.
Asset managers and investment bankers working at a single
firm are supposed to work separately, although the so-called
"Chinese walls" dividing them have come under heightened
scrutiny lately.
Deutsche Bank has said its asset managers had not
considered Deutsche's banking business when deciding how to
vote its shares.
The latest courtroom development added concern about the
chances for the deal's success in the market.
The deal's spread -- the difference between where the deal
values Compaq shares and where the market currently values them
-- widened to 7 percent from 5 percent on Thursday morning
after Fiorina's testimony.
The deal spread, which is a reflection of investors
thinking about the odds the deal will go through, had been as
wide as 26 percent in the weeks leading up to the vote.
((--New York Newsdesk (646) 223-6000))
REUTERS
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