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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Jimbo Cobb who wrote (94045)	12/8/2001 2:26:39 PM
From: Night Writer	Respond to of 97611

Foundation to Oppose to Hewlett-Packard, Compaq Merger Dec 08, 2001 (The Boston Globe - Knight Ridder/Tribune Business News via COMTEX) -- A foundation established by Hewlett-Packard cofounder David Packard has decided to oppose the merger of HP and Compaq Computer Corp., in a major blow to the troubled deal. "After thorough study and analysis the board has preliminarily decided, on balance, that the best interests of the foundation would be better served by Hewlett-Packard not proceeding with the proposed transaction," said Susan Packard Orr, chairman of the David and Lucile Packard Foundation. With 10 percent of HP's outstanding shares, the foundation is the largest shareholder. Its opposition could cause other major institutional investors to reject a deal that has received a lukewarm reception on Wall Street. Compaq and HP executives responded in a statement that they remain committed to the deal. "Our firm commitment to this merger stems from our conviction that it will deliver the industry leadership and earnings growth our shareholders expect and our employees deserve," the companies said. "For the proponents of the transaction, this is definitely not good news," said Daniel Kunstler, senior analyst at JP Morgan in San Francisco. But the foundation's decision was hailed by Walter Hewlett, son of HP cofounder William Hewlett and a staunch opponent of the deal. "Hewlett-Packard can create greater value for stockholders as a stand-alone company than as a company combined with Compaq," Hewlett said in a statement. He added that his conversations with other shareholders have revealed "sizable and widespread opposition to this transaction," and vowed to wage a proxy fight if HP and Compaq bring it to a shareholder vote. HP and Compaq announced their $25 billion stock-swap merger in early September, but shares of both companies' stock slumped as investors regarded the deal with skepticism. In October, Matrix Asset Advisors, a major shareholder, urged the companies to scrap the deal. Walter Hewlett and his family's foundation rejected the pact; so did David Packard, the cofounder's son. Now, at least 17 percent of HP shares are held by foes of the deal. Analysts think HP chief Carly Fiorina and Compaq CEO Michael Capellas will be hard-pressed to make the merger happen. "If I were Compaq I would be crafting a Plan B," said Terry Shannon, publisher of an industry newsletter that tracks Compaq. But JP Morgan's Kunstler said Fiorina and Capellas will fight. "I think if I am Carly Fiorina or if I am Michael Capellas as well, I pretty much fight like mad. I go out there and I redouble the effort to try to rally the remaining shareholders," Kunstler said. "I don't think there's anything else they can do at this point." By Hiawatha Bray To see more of The Boston Globe, or to subscribe to the newspaper, go to http:/ www.boston.com/globe (c) 2001, The Boston Globe. Distributed by Knight Ridder/Tribune Business News.