NEW YORK – Computer and printer maker Hewlett-Packard Co. lobbied shareholders and the general public Wednesday, stepping up efforts to get backing for its proposed merger with rival computer maker Compaq Computer Corp.
Palo Alto-based Hewlett-Packard sent a letter to shareholders on Wednesday that included a nearly 50-page presentation on the merger's merits and took out a two-page advertisement in the Wall Street Journal that said the merger will bring innovation and change.
Hewlett-Packard's media blitz comes as the battle between relatives of the company's founders -- who plan to vote their 18 percent stake against the merger -- and the two companies becomes increasingly heated.
With the shareholder vote not expected until at least late February, analysts say the battle is only going to get more intense as both sides dig in their heels on their positions and try to sway investors to their sides.
"The only thing that's going to stop this from getting to be the worst prime time soap opera in the IT industry ever is if the companies decide to go to different plans. They either structure a new deal or abandon the deal and go to Plan B," said Tom Austin, vice president and research fellow at Gartner Inc.
Hewlett-Packard wasn't immediately available for comment.
In the letter, Hewlett-Packard Chief Executive Carly Fiorina and Compaq Chief Executive Michael Capellas challenged comments by Walter Hewlett, the son of Hewlett-Packard's founder and an outspoken critic.
"We believe (Walter Hewlett's) recent opposition to the merger is based on a static and narrow view of HP and the industry, selectively ignores the synergies of this transaction, relies on faulty financial assumptions and analyses, and offers no alternatives to address HP's challenges and opportunities," the executives wrote.
"While we certainly respect the right of the Hewlett and Packard heirs to express their views, we ask you to keep in mind that their motivations and investment interests may be very different from your own," the letter continued.
SELLING INTEGRATION
The letter also included an attachment that further explained the $2.5 billion in revenues the companies say the mergers will create and discussed integration planning. Investors often cite integration of the two companies in the largest technology merger ever as a concern.
The document also contains responses to Walter Hewlett's specific criticisms of the merger. One attachment to the main letter, for instance, is entitled "Displays Simplistic Anti-Merger Bias."
The advertisement, meanwhile, takes a stab at critics who say that a better path for Hewlett-Packard is to focus on its more profitable printing business. It also talks about the combined entity's scope and scale and ability to offer "end-to-end solutions" that customers demand.
But Gartner's Austin, who runs a group of analysts that largely advises computer users, said he had other ideas for an advertisement. "I would really have been a heck of a lot more impressed if this was a list of the institutional shareholders who had committed to vote for the deal," he said.
So far, it's unclear how many institutional investors plan to vote for the deal and many Wall Street analysts say the chance of it going through is only about 25 percent.
The push for shareholder votes follows efforts that Fiorina has made to lobby the company's employees.
In a memo last week, Fiorina wrote: "Every one of you can help -- by staying positive about the merger, educating yourself about its benefits, and by delivering strong first-quarter results."
Hewlett-Packard on Tuesday said it plans to file within a month for approval from European Union regulators.
Hewlett-Packard shares were down 15 cents, or 0.7 percent at $20.35 and Compaq shares were off 14 cents, or 1.5 percent, at $8.98 in midday trading on the New York Stock Exchange.
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