Court to consider HP-Compaq merger case

Peter Henderson

SAN FRANCISCO: Computer maker Hewlett-Packard Co. said on Tuesday it has

asked a Delaware court to dismiss dissident board member Walter Hewlett's legal

challenge to the nearly $19 billion merger of HP and Compaq Computer Corp.

The Delaware Chancery Court, which specializes in corporate law, will

consider the motion on Sunday morning, said Ken Lagowski, an office manager for

the court. Hewlett-Packard spokeswoman Rebeca Robboy said Hewlett did not have

legal grounds to call for the March 19 shareholder vote on the merger to be

thrown out, even if he were to prove the allegations of misconduct that the

company has denied.

Walter Hewlett sued last week to annul the March 19 vote, which HP, aiming to

build a technology powerhouse with the merger, believes it won by a slim margin.

The official count may take weeks.

Hewlett had opposed the merger for months, assembling a coalition including

HP founding families who believed the deal, the largest in computer industry

history, would dilute the value of HP's printing franchise and saddle it with a

huge low-profit personal computer business.

HP on Monday filed a motion to dismiss Hewlett's suit. Chancellor William

Chandler III will consider the motion on Sunday at 9:30 a.m. (EST) (1330 GMT),

Lagowski said. If the suit is not dismissed, the court would consider Hewlett's

allegations that HP effectively bribed Deutsche Bank with business and coerced

it to vote for the deal, as well as misleading shareholders on the progress of

merger planning.

Hewlett-Packard's Robboy said Hewlett did not have legal grounds to call for

the merger vote to be thrown out. "Even if the allegations were true, which

they are not, they do not provide any basis for legal relief," said Robboy.

"The allegations that HP bought votes from Deutsche Bank or improperly

coerced it to change its votes are false. In addition ... Hewlett's allegations

(that) HP misinformed shareholders about integration are without basis,"

Robboy said.

HP added in the filing that Hewlett's allegations were not grounds for

dismissal since he had neither alleged there was a binding agreement between

Deutsche Bank and HP nor shown that stockholders were defrauded and lured into

voting a particular way.

HP said the integration plan and its progress had been discussed widely in

the press and among investors and in Hewlett's press releases before the vote.

HP on Monday had also said it would not renominate Hewlett to its board of

directors in light of his lawsuit.

"We are optimistic that we will be able to complete the merger on our

current schedule of late April, early May," Robboy added.