HP loses court battle over Comdisco

A federal judge dealt Hewlett-Packard a major set-back by rejecting HP's

proposed $750 million purchase of Comdisco's disaster-recovery software

business. The court then awarded the Comdisco unit to SunGard Data Systems,

which had offered $825 million.

In harsh words US Bankruptcy Judge Ronald Barliant in Chicago accused HP of

seeking to subvert the bankruptcy process. Barliant said HP's attempt to snatch

the Comdisco unit away from SunGard for $750 million violated the auction rules

established by the court. "Hewlett-Packard seeks by economic intimidation

to annul an order of this court on which other parties have relied. The value of

bankruptcy is the integrity of the process. Absent that, bankruptcy may become a

sham to cover clever business practices.''

"Justice was done,'' said SunGard general counsel Larry Gross said. HP

did not comment on the court ruling. Just two weeks ago, HP thought it has won

the deal after increasing its bid from $610 and getting support from the U.S.

Justice Department. Analysts said they expect HP to appeal the court ruling. HP

may also get help this week when the judge in the antitrust case rules on the

matter. If SunGuard loses that ruling Comdisco will have to determine what to do

next. It still has an offer from HP to buy its disaster-recovery unit for $610

million, but it's unlikely that Comdisco would sell it for that amount, said

Comdisco