BofA Investment Unit To Vote Against HP-Compaq Deal
Hewlett-Packard Compaq
Banc of America Capital Management confirmed it was the anonymous investor quoted by Reuters late on Tuesday as saying it would oppose the deal because it would dilute the combined company's earnings and rely too much on the sale of personal computers.
It said it would vote about 6 million of the some 54 million HP shares it owns against the deal. The remaining shares are held in the firm's name but the votes are controlled by its investors.
About 200 Banc of America investment advisers will be sent a memo on Wednesday explaining the firm's decision, a spokesman said.
Banc of America said it would tell its clients why the parent bank was opposed to the $22 billion deal, but would not advise them to vote one way or the other. Banc of America was the fifth biggest HP shareholder as of Dec. 31, according to Thomson Financial's ShareWatch.
A spokesman for the firm said the deal would dilute earnings, face difficult integration problems and create a company too reliant on PC sales.
HP argues that the merger will create a one-stop-shopping technology source to rival IBM.
Banc of America joins the opposition to the deal by HP's founding families, dissident HP board member Walter Hewlett, the California Public Employees Retirement System, or Calpers, Brandes Investment Partners, and Wells Fargo, among others.
Some big investors, including Alliance Capital Management and Barclay's Global Investors, side with HP.
Institutional Shareholder Services, which independently advises big investors, last week threw its support behind the bitterly contested merger plan.
HP board member Phil Condit said on Monday that most top shareholders were behind the merger plan. Walter Hewlett retorted on Tuesday that most were on his side.
Analysts generally agree that the March 19 HP shareholder vote on the Compaq
deal looks like a toss-up.
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