HP/COMPAQ: Shareholders gather to vote
- 20 March, 2002 08:49
Hewlett-Packard shareholders began gathering Tuesday at The Flint Center in Cupertino, California, waiting anxiously to enter and cast their ballots on HP's proposed acquisition of Compaq Computer. The vote on the contentious US$21 billion deal arrived with a flurry of last-minute stumping by HP executives and critics of the acquisition, who have spent the last several months playing out the debate in the media.
Those opposing the deal were the most active outside The Flint Center, handing out fliers and wearing signs listing their reasons for voting against the acquisition of Compaq. One pamphlet from a French trade union opposing the deal read, "The nightmare of integrating HP and Compaq has been greatly underestimated. The HP Compaq merger will cost you a fortune."
Several campaigners carried signs forecasting, "Merger today, Chapter 11 tomorrow."
The media are also out in force, thrusting cameras and microphones into the gathered crowds. One desperate reporter, seeking proponents of the deal, called out to a long line of shareholders in search of someone planning to vote yes. Out of the group of 30 in her range, only one person came forward.
Some shareholders were still undecided on how they would vote, even as they waited to enter the meeting.
"I haven't heard compelling evidence from either side. Nobody has demonstrated where, three to five years from now, the company is going to be. If I am not convinced after this meeting, I'm going to vote no," said Joseph Algieri, an HP employee.
"It bothers me that HP management let it get to this point," he added.
Another undecided shareholder said the deal will come down to a "vote of the pocketbook."
"It's really about whether or not this deal has value," said Ajamu Al-Rafiq, who traveled three hours to Cupertino from his home outside Sacramento. "I haven't made up my mind yet. I'm keeping an open mind."
One former HP employee attending the meeting, Julie Patrick, said she had already mailed in her no vote.
"I think the idea of HP getting further into the computer business is not a good thing. It's a commodity market," she said. "The main thing that swayed me is that Carly (Fiorina, HP's chief executive officer) has been a bit unprofessional."
First announced in September, the deal would combine two of the largest computing companies into a services-driven vendor that proponents say would be better equipped to compete with IBM Corp. Leading the charge has been HP Chairman and CEO Fiorina, who is widely expected to resign if the merger falls through.
Critics have responded that the combined company would increase HP's stake in the stumbling PC market while diluting its lucrative printing and imaging businesses.
One of the deals most adamant opponents, Walter Hewlett, an HP board member and son of one of HP's founders, led a vociferous media campaign to sway HP shareholders in his favor. Backed by foundations connected with HP heirs that own close to 18 percent of HP's shares, Hewlett sent letters to shareholders, placed ads in newspapers and issued frequent news releases criticizing the deal.
HP has responded in kind, countering his attacks with its own blitz of media propaganda. At one point the company sought to discredit Hewlett by describing him as a musician and an academic with little experience in management.
The decision of HP's shareholders will be revealed by IVS Associates Inc., a small firm based in Newark, Delaware, that specializes in shareholder vote counting. IVS Associates can take weeks to reveal a vote tabulation. Executives there would not say when it expects to complete counting on the deal.
Just ahead of the vote, large investors, user groups and HP employees were among those casting their votes both for and against the deal. While HP and Hewlett claimed small victories based on proxy voting results, the official outcome will likely remain unclear until IVS Associates releases its tally of votes, according to an HP statement. Depending on how close the vote is, the final tally could take as long as several weeks to finish.
Compaq shareholders, meanwhile, are due to vote on the merger Wednesday, and are expected to approve the deal.