Print

Mail

wiki links

Hewlett explains opposition to H-P acquiring Compaq

The Hewlett-Packard Co board member leading the fight against the company's US$22 billion plan to buy Compaq Computer Corp said in a filing Thursday he originally voted for the deal only to help H-P secure a good price.

After blasting the deal for two months, Walter Hewlett gave the Securities and Exchange Commission a preliminary copy of the proxy statement he will use to ask shareholders to vote against the plan. H-P and Compaq already have filed their version seeking yes votes.

Hewlett, oldest son of the late H-P co-founder William Hewlett, said he first heard chairwoman and CEO Carly Fiorina was negotiating a deal with Compaq in May, and voiced concern about it at board meetings over the next few months.

Negotiations with Compaq went on, however, and on Aug. 31, H-P attorney Larry Sonsini told the board that the terms being finalized required the directors' unanimous support. Hewlett said he told the board he was in a tough spot, because he was not convinced the acquisition was good.

According to Hewlett's filing, Sonsini asked Hewlett to step outside the board meeting, and told him H-P would go ahead with the acquisition whether or not Hewlett went along. However, he said, Hewlett's opposition could force H-P to renegotiate the terms and possibly pay more for Compaq.

Hewlett said Sonsini told him he could approve the deal as a board member and vote against it as a shareholder. Hewlett agreed, deciding he should do all he could to help H-P negotiate the best possible price -- even for a deal he opposed.

Despite joining in the unanimous support for the deal, Hewlett said he reminded his fellow board members hours before it was announced on Sept. 3 that he likely would vote his shares against it.

Sonsini and H-P representatives did not immediately return calls seeking comment.

H-P and Compaq believe merging will make them a leader in key technology segments, improve their offerings for corporate customers and speed their pace of innovation. The companies are awaiting regulatory approval before setting a date for a shareholder vote.

Hewlett believes the deal is too risky, would increase H-P's reliance on the weak personal computer business and dilute the contribution of H-P's profitable printing division. He said his opinion has been bolstered by the negative reaction from many analysts and investors.

The opposition camp includes various Hewlett and Packard family interests that hold over 18 percent of H-P stock, including the Packard family charitable foundation.
This story has been viewed 1483 times.