HP Declares Victory In Compaq Merger Vote

Hewlett-Packard

HP claimed victory shortly after Hewlett, son of HP co-founder William Hewlett, said this morning that the preliminary outcome of the Tuesday shareholder vote wouldn't be known "for a few weeks."

"We are gratified that HP shareowners recognize the compelling strategic and economic benefits of the merger and that a decisive majority of shares not affiliated with the Hewlett and Packard families and foundations appear to have been voted in favor of this transaction," HP Chairman and CEO Carly Fiorina said in a statement.

"This board remains committed to building sustainable shareowner value," Fiorina stated. "We are thankful for the support we've received from our shareowners, employees and customers during this difficult proxy fight. The intense debate throughout this contest has raised important issues and prepared us even more fully for the integration and marketplace challenges that lie ahead. It's now time for all of us -- those who supported the merger and those who opposed it -- to pull together for the benefit of the company."

Fiorina added, "We look forward to Compaq's shareowner vote tomorrow and the official certification, and we expect to complete the merger soon after the vote is certified -- allowing us to quickly begin execution of the comprehensive integration plans we have been preparing for many months. Today's vote is the beginning of the process of building an even greater HP. We have much work to do, but we are energized and confident as we move to capitalize on the potential of this combination."

Shortly after all proxy cards received by Hewlett were turned over to the independent inspectors of elections, Hewlett issued a statement that said in part, "It is expected that the preliminary tabulation will be provided to Mr. Hewlett and Hewlett-Packard in a few weeks, after which both sides will have the opportunity to examine the proxy tabulation."

If HP's victory stands, the merger--the largest in IT industry history--would create an $85 billion behemoth with industry leadership in enterprise storage, Windows and Unix servers, and a No. 3 slot in IT services. Approval of the merger also would show that shareholders rejected Hewlett's argument that the merger would expose HP to low-margin PC business that the combined company now assumes an industry leadership position. What's more, the vote signals a personal victory for Fiorina over Hewlett, who had called for her ouster should shareholders reject the deal.

But the victory doesn't end the daunting challenges faced by Fiorina and HP. While Compaq and HP have had 900 employees working full-time on integration planning, merging cultures and organizational structures, keeping customers in the fold remains a formidable task.

A victory for HP management, however, would remove the cloud cast over the deal by daily and often bitter attacks and counterattacks between the HP and Hewlett camps.