Delaware court delays ruling on lawsuit against HP

Caroline Humer

NEW YORK: A Delaware court on Sunday said it would issue in the next few days

a ruling on whether it will throw out a lawsuit filed against Hewlett-Packard

Co. by dissident board member Walter Hewlett.

Hewlett, who is fighting HP's acquisition of competitor Compaq Computer

Corp., asked the Delaware Chancery Court at the end of March to stop the deal,

alleging that HP management bought votes and misled a key adviser.

HP, which believes it won a March 19 shareholder vote on the deal, in turn on

April 1 asked the Delaware court, which specializes in corporate law, to dismiss

the suit. A spokeswoman for Walter Hewlett, who owns an HP stake through the

William R. Hewlett Revocable Trust said, "We're grateful the court took up

this issue on such short notice and we await a court ruling and in the meantime

discovery on the complaints is ongoing."

The spokeswoman said the court would issue a ruling in the coming days.

Chancellor William Chandler III considered the motion in a court hearing that

began Sunday morning at 9:30 a.m. EDT. HP spokeswoman Judy Radlinsky said the

hearing lasted about two and a half hours.

"HP is pleased that the chancellor listened carefully to our argument

and we look forward to his decision," said Radlinsky. "We continue to

believe the allegations are without merit and we remain confident that we will

prevail." The lawsuit is now due to go to trial in the Delaware court

starting on April 23. The judge has reserved three days for the trial, although

it could go longer.

In addition to the lawsuit's outcome, the companies are waiting for a final

tally of HP shareholders votes, which should be ready in the next few weeks.

If HP and Compaq merge, it would be the largest technology deal ever,

creating a technology giant that HP chief executive Carly Fiorina says would be

better able to compete with No. 1 computer company International Business

Machines Corp.

Walter Hewlett has opposed the merger for months, assembling a coalition that

includes other members of the Hewlett and Packard families who also believed the

deal would dilute the value of HP's printing franchise and saddle it with

Compaq's low-profit personal computer business.

Hewlett's suit alleges that HP effectively bribed one of its investors,

Deutsche Bank, with business and coerced it to vote for the deal. It also says

that HP mislead shareholders on the progress of the merger planning. HP has

called the suit baseless. It also has said that it doesn't plan to renominate

Hewlett to its board of directors.