Hewlett-Packard Co. said in a statement Wednesday that its shareholders have approved the company’s acquisition of Compaq Computer Corp., based on a preliminary vote count by independent inspectors. Shareholders voted 837.9 million shares in favor and approximately 792.6 million shares against, with an “insignificant” number of votes that were cast still unresolved, HP said.
The tally by IVS Associates Inc., in Newark, Del., is subject to a recount if demanded by either side, according to HP spokeswoman Rebeca Robboy. If HP acquisition opponent Walter Hewlett demands a recount, both parties would participate in a review of the proxies voted, HP said in the statement. That review probably would begin promptly and last about one week, the company said.
HP’s proposed acquisition of Compaq, which would be the largest takeover ever in the IT industry, has become the subject of a heated battle between HP management and Hewlett, who is the son of company co-founder William Hewlett.
HP chairman and chief executive officer Carly Fiorina is confident that HP will be able to move forward with the deal on schedule and launch the new company in early May, according to a message she sent Wednesday to HP employees, which was also released to the media.
In a statement, the William R. Hewlett Revocable Trust, which has opposed the merger, called the margin in the vote “extremely narrow.”
“These are preliminary results and both sides will have the opportunity to examine and challenge the proxy tabulation prior to final certification. In addition, the pending litigation with Hewlett-Packard in the Delaware Chancery Court must be heard before any final outcome is determined.”
As reported, the trust filed a complaint against HP last month in a bid to block the merger, in which it took issue with the way HP solicited votes to approve the deal. A trial in that case is scheduled to begin April 23rd, the trust said.
In her message to HP employees, Fiorina said she was confident that HP will prevail in the court case. The company also is cooperating fully with investigations by the U.S. Attorney’s Office and the U.S. Securities and Exchange Commission that stem from the lawsuit.
“We waged this proxy contest openly, fairly and lawfully, and we won the merger vote on its merits,” Fiorina said in the statement.
Most of the votes against the merger came from shareholders affiliated with the Hewlett and Packard families and the foundations with which they are associated, according to HP. Shareholders not affiliated with those parties voted in favor of the deal by a margin of roughly 2:1, HP said.
If there is no recount, IVS later will produce a final tally, Robboy said. In addition, the final tally is subject to a challenge process that would take an additional one or two days, according to the statement.
“Certainly this announcement puts the momentum back in HP’s favor,” said Paul McGuckin, a vice-president and research director with Stamford, Conn.-based Gartner Inc. “I do believe, however, that the trial next week is going to be ugly for HP, and that some statements will put HP in a bad light.”
McGuckin said a “a wide net of subpoenas” has been cast for the court date in Delaware which could potentially reveal a darker side of HP’s management. “There are a large number of HP employees that appear to hate Carly Fiorina and hate the merger,” McGuckin said. “It will tarnish HP’s image further, which is too bad.”
Despite the preliminary tally of votes, investors and customers will probably have to wait until Hewlett’s legal push against the merger has run its course before they will know for sure whether the companies will join together, he added.
