BANGALORE: Hewlett-Packard has claimed that it has won shareholders approval to merge Compaq into the company. In a statement shortly after the close of voting on Tuesday, HP Chairman and CEO Carly Fiorina said that "based on the preliminary estimate of shareowner proxies by its proxy solicitor, it (the management) believes it has received sufficient votes to approve HP's merger with Compaq Computer Corporation."
The results, however, are not official, which, Fiorina said would take four to six weeks. She called the results "slim but decisive".
The opposition camp, lead by Walter Hewlett refused to accept the preliminary findings of the voting. He said the results cannot be determined at this moment. He said that he would remain active in HP and expressed his intention to remain on the board of the company.
Compaq, in a statement, has said that it was pleased that HP believes it has sufficient votes to approve the merger. Compaq Chairman and CEO Michael Capellas said," From the estimate of shareowner proxies by its proxy solicitor, it (HP) believes it has received sufficient votes to approve HP's merger with Compaq Computer Corporation." He added, "We continue to believe that this merger will rapidly accelerate our strategy, improve overall earnings power and provide increased value for customers, shareholders and employees. With the HP vote now behind us and the Compaq shareholder vote Wednesday, we are very close to making this merger a reality."
Fiorina, in her statement, said that she expected a favorable vote from Compaq shareholders, who would vote on the merger on Wednesday. She said," We look forward to Compaq's shareowner vote tomorrow and the official certification, and we expect to complete the merger soon after the vote is certified -- allowing us to quickly begin execution of the comprehensive integration plans we have been preparing for many months. Today's vote is the beginning of the process of building an even greater HP. We have much work to do, but we are energized and confident as we move to capitalize on the potential of this combination."
The unofficial result has ensured that the issue will remain in the public eye for a few more weeks.
Reuters adds
Peter Henderson and Duncan Martell
CUPERTINO: Hewlett-Packard Co. chief executive Carly Fiorina on Tuesday
claimed shareholders had narrowly approved her $20 billion plan to buy Compaq
Computer Corp., but dissident board member Walter Hewlett refused to concede
defeat.
Fiorina immediately moved to quash fears that a tortured count similar to the
2000 election poll in Florida would engulf the HP ballot and said the companies
would move ahead full steam with integration planning, including 15,000 layoffs.
Shareholders briefly booed a tired-looking Fiorina during the special meeting
to decide whether to carry out the biggest merger in computer industry history
at HP, one of Silicon Valley's first start-ups which began in a garage 63 years
ago.
But the iron-willed chief brought in three years ago to shake up the ailing
company declared victory immediately after the meeting, calling the margin of
victory "slim but sufficient."
Back to academia for Hewlett
Fiorina aims in one stroke to nearly double revenues to more than $80
billion, expand and deepen the entire line of PCs, printers and large computers,
and take on current No. 1 computer maker International Business Machines Corp.
The shareholder meeting, convened in a Silicon Valley concert hall, gave a
warmer welcome to dissident director Walter Hewlett, son of co-founder Bill
Hewlett, who afterward said the count was "razor thin" and too close
to call. A source in his camp put the pro-merger margin at less than 0.5
percent.
That would be about 8.5 million of roughly 1.7 billion shares HP says voted.
"We disagree with his numbers," an HP spokeswoman said.
Hewlett, who led a spirited four-month campaign against the deal, argues the
acquisition would mean giving Compaq shareholders a chunk of HP's valuable
printing unit in exchange for a low-technology, low-profit PC business.
His reserved manner is the opposite of Fiorina's outgoing, salesmanship, but
Hewlett was greeted as a hero by merger opponents, including some HP employees,
as he strode past placards calling for Fiorina's ouster and into the hall, where
he was met by a standing ovation.
Hewlett joked that he was ready to go back to his old life as an
"academic and a musician", the phrase HP used in a nasty battle to
undermine confidence in his financial calculations that the deal would hurt
share value.
Wall Street appeared ready to give Fiorina the benefit of the doubt, as the
gap between HP and Compaq shares narrowed, moving Compaq much closer to the
level implied by the deal, but a final tally was not expected for weeks.
No pregnant chads
Fiorina said the vote was not similar to the presidential poll, when the
victor was unclear because of confusion over balloting.
"Everyone wants a hanging chad battle now," Fiorina said.
"There's an 'X' there (on the ballots). It's pretty simple. We don't have
dimpled chads, and hanging chads, and pregnant chads."
IVS Associates, which certifies the vote, is taking the ballots back to its
base in Newark, Delaware, where it will count many by hand -- and in private --
before offering both sides the chance to challenge ballots for potential flaws
like postmarks, date of submission and number of shares held.
Hewlett said he was optimistic that a tally would show that shareholders had
rejected the merger. "In a proxy contest this close, where stockholders are
changing their votes right up until the closing of the polls, it is simply
impossible to determine the outcome at this time," he said in a statement.
On Tuesday, Compaq gained 78 cents to $11.14 while HP fell 45 cents to
$18.80. With HP at that level, the deal terms imply Compaq shares should trade
at $11.89.
HP's stock has fallen 19 percent since the deal was announced on Sept. 3,
while Compaq dropped 10 percent. IBM shares rose 7 percent in the same period.
The drop in HP stock has brought the value of the deal down from $25 billion
when it was first announced to $20 billion in HP stock.
SG Cowen analyst Richard Chu said the deal seemed done. "I don't think
(HP) is going to be issuing a wild, unfounded memorandum here, so I think it
says the probability is very high that they do indeed have the vote and that it
will be ratified over the next couple of weeks," Chu said.
In addition, before the companies can close the deal, Compaq shareholders
must also approve the merger in their shareholder vote, which is scheduled for
Wednesday.
The little guy weighs in
Shareholders, who were largely negative on the deal, peppered an upbeat
Fiorina with questions about everything from layoffs to her salary during the
meeting. Picketers from Compaq's French unit protested job cuts, one placard
declaring, "Carly's dream is a nightmare for workers."
David Chen, an HP retiree who worked for the company for 23 years, said his
friends at the company are wary of the merger. "HP morale is very
low," he said. But major shareholders appeared to have fallen in line
Fiorina, aside from Hewlett and Packard family trusts with 18 percent of stock,
as financial investors calculated that the job cuts could help boost profits.
Roy Papp, head of fund manager L. Roy Papp & Associates, which voted
about 800,000 HP shares for the merger, said he thought that employees would
pull together now that the merger uncertainty is in the past. "I think the
large part of the employees' opposition is the fact that they know the merger
will cause the layoffs of 15,000 people, so obviously the employees don't want
to increase the chances of that slimming down," Papp said.
Fiorina and Hewlett both smoothed over their sharp differences, claiming
separately that HP was not "in crisis" and that the company which
helped put Silicon Valley on the map would return to the "HP way" of
pulling together no matter what decision shareholders had given.