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HP Says Will Go Ahead With Compaq Merger Despite Family's Opposition

By Fox News
Published | Updated

Hewlett-Packard on Tuesday said that it was committed to its planned merger with Compaq Computer and that it expects shareholders to support it despite opposition from the Hewlett family.

A coalition of Hewlett family members that controls more than 5 percent of Hewlett-Packard stock said earlier Tuesday they intended to vote against the company's proposed $24.87 billion acquisition of Compaq, possibly pushing an already fragile deal to the verge of collapse.

In a statement, Hewlett-Packard said that both management and the board of directors at Hewlett, as well as at Compaq, remain committed to the merger.

In addition, Hewlett-Packard said it will file a shareholder proxy in the next few days.

The deal, which would make the combined firm the No. 1 personal computer maker, was announced in early September and panned by Wall Street, losing about $4.28 billion from its original value.

As a group, Walter Hewlett, Eleanor Hewlett Gimon and Mary Hewlett Jaffe are children of Hewlett-Packard co-founder William Hewlett. Walter Hewlett is a trustee of the William R. Hewlett Revocable Trust. That trust, the Hewlett Foundation and the family members together own more than 100 million shares, or about 5 percent, of Hewlett-Packard stock.

The Hewlett family members had said that Hewlett-Packard can create greater shareholder value for stockholders as a stand-alone company.

"I am absolutely certain that Compaq is not the right partner for Hewlett-Packard," Walter Hewlett told Reuters. "Given the lack of stockholder benefits, I believe the extensive integration risks associated with this transaction are not worth taking," he said.

Hewlett said to this point he has not talked to any other shareholders about opposing the deal, but declined to comment on whether he planned to do so in the coming weeks.

Hewlett said a merger with Compaq would increase H-P's exposure to the slowing PC business and dilute stockholders' interest in Hewlett-Packard's printer business.

Hewlett declined to comment on the future of H-P's Chief Executive Carly Fiorina, who some have speculated could be forced from her post if the merger does not go through.

Reuters and the Associated Press contributed to this report.