HP/COMPAQ: Bank of America joins opposition

Bank of America Corp.'s investments unit plans to vote the shares it controls against Hewlett-Packard Co.'s planned acquisition of Compaq Computer Corp.

Bank of America Capital Management Inc. is one of HP's largest institutional shareholders. The company holds around 54 million shares of HP, nearly 3 percent of HP's outstanding total, but directly controls only 6.4 million shares. Those 6.4 million shares are the only ones Bank of America will be voting against the deal. The remaining shares will be voted by the bank's individual clients.

The firm is not issuing a recommendation to its clients, and has made no formal announcement of its opposition to the deal. It is merely confirming published reports of its intention, said spokesman Joe Fazzino.

Integration challenges and the potential for dilution of HP's product portfolio through an increased reliance on the PC business were key factors in Bank of America's decision, Fazzino said. Those risks have been repeatedly emphasized by Walter Hewlett and others opposing merging the two companies.

At least one major HP institutional investor, Barclays Bank Plc, will be supporting the acquisition. Barclays has said it would vote its 60 million shares in accordance with the recommendation of Institutional Shareholder Services Inc., which last week released a report backing the deal.

Aligned against the deal are shareholders owning more than 20 percent of HP's outstanding shares, including several relatives of HP's co-founders, their trusts, institutional investor Brandes Investment Partners LP and the pension fund of the California Public Employees' Retirement System.

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