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

To: Elwood P. Dowd who wrote (96651)	3/28/2002 5:56:11 PM
From: Night Writer	Read Replies (2) \| Respond to of 97611

HP's Merger Tactics Ripped in Suit NEW YORK, Mar 28, 2002 (AP Online via COMTEX) -- Hewlett-Packard's management improperly enticed a large institutional investor to switch sides and support HP's hotly contested $19 billion merger with Compaq Computer Corp., a lawsuit filed Thursday claims. The move "tainted more than enough votes to swing the election in favor of the merger," said the lawsuit, filed by Walter Hewlett, the HP director who led the five-month campaign against the combination. After the vote last week, HP said it had won approval by a slim margin for biggest merger ever in the computer industry. Although final results won't known for weeks, the margin of victory is thought to be less than 1 percent, the lawsuit said. The suit asks the court to invalidate votes in favor of the merger and declare the combination defeated, or order a new vote. HP said in a statement that it would vigorously defend the lawsuit, which it said was without merit. "We find it regrettable that Mr. Hewlett has chosen to resort to baseless claims without regard to the impact of his false accusations on HP's business reputation and employees," the statement said. The lawsuit claims a division of Deutsche Bank originally decided to vote more than 25 million shares against the merger. But the bank changed course and switched as many as 17 million votes in favor of the combination at the last minute because it was worried about losing out on future business with HP, according to the lawsuit, filed in Delaware Chancery Court in Wilmington, Del. As of Dec. 31, Deutsche Asset Management was the 11th largest HP institutional shareholder, and its block represented 1.31 percent of the company's shares, according to a report filed with Securities and Exchange Commission. HP induced Deutsche Bank to switch sides by adding the bank as a co-arranger on a multibillion dollar line of credit in the days before the vote, the lawsuit said. Then, "Deutsche Bank was led to understand that if it did not switch its votes in favor of the proposed merger, its future business dealings with HP would be jeopardized," the lawsuit said. Officials with Deutsche Asset Management did not immediately return telephone messages Thursday seeking comment. Those on both sides of the deal had worked hard behind the scenes to make sure large investors' votes were nailed down or to persuade some HP shareholders to change their minds. It will take several weeks to determine the official result of what appeared to be the closest corporate election in years. Independent proxy counters must verify each vote, and each side can challenge whether the proper people signed certain ballots. In his lawsuit, Hewlett asked for expedited court proceedings "so that these very important issues can be resolved as soon as possible." In afternoon trading on the New York Stock Exchange, Compaq shares fell 30 cents to $10.30 while Hewlett Packard shares rose a penny to $17.78.