Compaq Computer Corp co-founder Joseph Canion endorsed Hewlett-Packard Co's planned US$22.8 billion purchase of Compaq, saying the combination would create a stronger company, the Wall Street Journal reported.
"Here, fundamentally, are two great companies that could potentially combine and become a stronger company if they do it well," said Canion, who broke his silence on the acquisition at the request of Compaq Chief Executive Officer Michael Capellas, the newspaper reported on its Web site.
Hewlett-Packard's largest stakeholder, the David and Lucile Packard Foundation, said last week it has "preliminarily" decided to oppose the deal. Walter Hewlett, a company director and son of co-founder William Hewlett, is waging a proxy fight to defeat the purchase.
"I don't think [Canion's comments] will be an issue for the shareholder vote," money manager Vincent Muscolino of David L Babson & Co, which owns shares of both companies, said in an interview. "I don't know if that's going to sway the Packard Foundation or Walter Hewlett."
Canion was one of three former Texas Instruments Inc engineers who founded Compaq in 1982. He was ousted as CEO in 1991 after the Houston-based company's earnings plunged amid competition from cheap personal computers from Asia.
Canion, now an investor and chairman of online library startup Questia Media Inc, couldn't be reached on Saturday. Compaq spokes-man Arch Currid said Canion and Capellas meet on occasion, though he couldn't confirm Canion's comments or say whether Capellas had asked Canion to speak out.
"There had been some concern that Compaq may have been wanting to move away from the transaction because of all these issues," Muscolino said. "But I think they have to make a big push to get the deal done, because they have more at stake now.
How are they going to go back to a customer and say, `no transaction, but don't worry?'"
In the Journal interview, Canion dismissed criticism of the acquisition by some Packard family members as based too much on emotion, and said the companies could overcome problems of product overlap through "smart and hard work," the newspaper reported.
"You might look at it differently in a strong economy or a strong computer market," Canion told the Journal.
"As bad as this market has gotten, you have to look at how do you strengthen yourself in difficult times. Often you gain strength in a difficult market by making moves."
Some shareholders have prodded Hewlett-Packard Chief Executive Carly Fiorina to abandon PCs and focus attention on the company's more profitable printer unit. They say adding Compaq's PC sales is the wrong strategy, though Fiorina insists that having PCs helps to sell other products.
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