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Thu, Mar 14, 2002 - Page 21 News List

Dissident H-P director says he can scuttle deal

AP , SAN FRANCISCO

With a week left until Hewlett-Packard Co investors vote on the US$22 billion purchase of Compaq Computer Corp, dissident director Walter Hewlett said he is confident the deal will be shot down.

"I believe I represent the views of a majority of stockholders," Hewlett said in a conference call with analysts and investors Tuesday. "The market does not like this merger."

Hewlett's camp includes more than 20 percent of HP shares. Besides Hewlett and Packard family interests with 18 percent of HP stock, several large investors have come out against the deal, including the California public employees' pension fund and Wells Fargo.

The company, meanwhile, also claims to have momentum on its side. Its tally appears to be at least 8 percent of HP shares, with the potential for much more from investors that will be swayed by Institutional Shareholder Services, a proxy advisory firm that blessed the deal last week.

"Most investors have policies that prevent them from making their voting decisions public, and we believe there is a silent majority of supporters," HP spokeswoman Rebeca Robboy said Tuesday.

In fact, HP director Phil Condit, the chairman and chief executive of Boeing Co, said Monday that a majority of HP's 20 biggest shareholders support the deal.

Hewlett, who said he has met with more than 100 large investors during his five-month fight to torpedo the acquisition, called Condit's contention false.

HP stockholders are due to vote on the deal next Tuesday. Most analysts say the race is too close to call.

HP and Compaq believe that together they can dramatically improve their end-to-end technology packages for corporate customers, but Hewlett called that a recipe for losing focus.

"Trying to do too much has been the downfall of many big conglomerates," he said.

He also reiterated his belief that HP is overpaying for Compaq and would be much better off concentrating on its existing businesses, such as printing and digital imaging.

Hewlett also said his family's charitable foundation, which owns about US$733 million worth of HP stock, is reducing its stake in the company. While HP stock makes up 35 percent of the foundation's assets now, it will comprise 15 percent in three years, he said.

HP's Robboy called that evidence that Hewlett is more risk-averse than many investors, saying he has "a short-sighted agenda to maximize short-term gain."

Two H-P directors warned Monday that many board members and some of the company's top executives might quit if shareholders reject the Compaq purchase.

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