BRUSSELS: Hewlett-Packard Co. is expected to win approval from the European
Commission for its plan to buy Compaq Computer Corp in a $25 billion deal, an EU
source said on Thursday.
The source added the Commission would not impose conditions on the
transaction. An HP spokeswoman at company headquarters in California had no
immediate comment, and referred questions to a colleague in Switzerland, who was
not immediately available.
The deal is an important test of antitrust relations between the EU and the
United States. In a controversial move, the European Commission last year
blocked General Electric's planned $42 billion purchase of Honeywell, prompting
US criticism.
It was the first time that European regulators had killed a merger approved
by their US counterparts. The US Federal Trade Commission has yet to rule on the
HP/Compaq deal. However, regulatory clearance is not the only hurdle the deal
faces. The shareholder vote on what would be the largest merger in personal
computer history is due in early March, with the outcome far from certain.
HP chief executive Carly Fiorina has had a tough battle selling the merger,
announced on September 4, after members of both the Hewlett and Packard founding
families said in December they planned to vote against the deal.
HP board member Walter Hewlett and other critics say that purchasing Compaq
would dilute the value of the company's well-known imaging franchise -- printers
and fax machines -- and saddle it with a big PC division when a focus on the
development of high end machines was needed.
But Fiorina has said the deal is the next, necessary step for the firm.
"To remain static is to lose ground," Fiorina told an audience in Las
Vegas in early January, quoting Dave Packard, the co-founder of HP.
(C) Reuters Limited.