Compaq Board Joins HP's In Rejecting Suggestion It Abandon Merger

The Compaq Computer board joined Hewlett-Packard directors in denouncing a suggestion by Walter Hewlett that the two companies abandon their merger plans.

"The board of directors of Compaq has carefully analyzed the short-term and long-term impact as well as the strategic implications of the proposed HP-Compaq merger," the Compaq board said in a statement late Thursday. "We are disappointed that both the Hewlett Foundation and the Packard Foundation have decided to oppose the transaction. We continue to believe that the combination of HP and Compaq will provide better market coverage, significant synergies and higher profits than either company would achieve on its own."

The Compaq board continued, "On that basis, we believe that this merger is well worth the effort and that our employees, shareholders and customers will be better served in the long term. Therefore, we will continue to vigorously encourage shareholders to vote in favor of the transaction."

Earlier in the day, the HP board also denounced dissident board member Hewlett's document filed with the Securities & Exchange Commission Thursday asking the HP board to end its merger plans in light of what he says is growing opposition to the deal.

"There is nothing new in this letter," the HP board said in a statement. "It is an unsubtle attempt to prevent other shareholders from having their say, even before the proxy has been mailed. Mr. Hewlett offers nothing here but his desire to promote additional concern about possible lost value. The truth is that HP's stock has recovered nearly all of the ground it lost since the merger was announced," the HP statement said.