Walter Hewlett Files Proxy Against Compaq Merger

Hewlett-Packard Co. founding family member Walter Hewlett filed Thursday a preliminary proxy statement to solicit votes against the proposed $22.3 billion acquisition of Compaq Computer Corp.

Hewlett, the son of HP co-founder Bill Hewlett and family member who has been the most vocal in his opposition to Chief Executive Carly Fiorina's merger plan, filed the widely expected statement outlining his opposition with the Securities and Exchange Commission.

Hewlett-Packard has already filed its own preliminary proxy ahead of a shareholder meeting on the largest merger ever in the computer industry. Shareholders are expected to vote early next year, though not before late February.

Hewlett detailed his analysis that the merger would dilute the value of Hewlett-Packard's printing business while increasing the size of the barely profitable -- or unprofitable -- personal computer division.

Hewlett-Packard recently countered Hewlett's previous arguments in a document buttressing its case that the merger would build a services and high-end computing franchise large enough to offer major customers almost everything they need.

"It looks like we've got a real (fight) on our hands," said Charles Wolf, an analyst at Needham & Co.

He said Hewlett's proxy was expected and underlines the degree to which he opposed the deal that pits management against the founders' children, who hold 18 percent of Hewlett-Packard's stock.

"From an amusement perspective, this is just terrific," Wolf said.

Hewlett said MacKenzie Partners would solicit proxies on his behalf.

Shares of Hewlett-Packard fell 10 cents to $20.80 and Compaq edged up 18 cents to $9.93 on the New York Stock Exchange.