HP/COMPAQ: Compaq: Shareholders approve acquisition

Shareholders of Compaq Computer approved the company's planned acquisition by Hewlett-Packard (HP) by a nine-to-one margin, Compaq announced Wednesday following a special shareholder's meeting in Houston.

"I am gratified that Compaq shareholders have seen the power behind the merger of these two great technology companies and given the Board of Directors and management their resounding support," said Michael Capellas, Compaq chairman and CEO.

He went on to say that strengths of the two companies "provide a truly unique opportunity to reshape the information technology industry."

Hewlett-Packard Co. shareholders voted on the acquisition yesterday, and the company claimed a majority had voted in favor of the deal despite fervent acquisition from opponents at its shareholder meeting. Preliminary vote counts showed that HP eked out a win, said Carly Fiorina, chairman and CEO of HP, during the meeting.

Said Capellas: "While official certification of the results of HP's shareholder vote is still in process, we stand ready to deliver the superior value that our customers, employees and shareholders expect."

"At the end of the day, this merger is about market leadership. We are ready to move forward," he said.

Compaq investors had gathered at The Wyndham Greenspoint Hotel in Houston this afternoon for a special shareholder meeting. With early support from large institutional investors and few calls for stockholders to block the deal, Compaq had been expected to garner enough support to cement its decision to merge with HP.

Walter Hewlett, an HP board member and son of one of HP's founders, led the vocal media campaign against a merged HP/Compaq and rushed to counter Fiorina's pronouncement in a press conference after the vote. The Hewlett camp said the difference in preliminary vote results is less than 1 percent, a "razor thin" margin that makes it impossible to declare an official victor before last-minute votes trickle in and all ballots are double-checked.

IVS Associates Inc., a small firm in Newark, Del., that specializes in tabulating vote results, will announce the official outcome after pouring through ballots and shareholder information. A final tally from IVS could take weeks.

At the HP gathering, investors had booed Fiorina and awarded Hewlett a standing ovation.

Some large Compaq investors voted against the deal, but no individual or organization came out against the acquisition with the same fervor as HP dissenters. The majority of stockholders appeared content with Compaq executives' claims that a merger with HP would be in the investors' best interests.

In a merged company, Compaq's storage, fault-tolerant server, services and low-end server businesses would play a prominent role. With those additions to HP, the new company would rival IBM, advocates claim.

Even so, officials have said the combined company would lay off close to 15,000 workers.

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Stacy Cowley

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