Judge: Hewlett Attorneys Fail Completely In Proving Charges

Hewlett-Packard Compaq Computer

Delaware Chancery Judge William Chandler III rejected all charges against HP, brought in a suit by dissident HP director Walter Hewlett alleging the company misled investors on the financial viability of the merger and secured its victory through a vote-buying scheme with Deutsche Bank.

Chandler dismissed the alleged smoking-gun voice mail from HP CEO Carly Fiorina to HP CFO Bob Wayman in which Fiorina urged Wayman to "do something extraordinary" to persuade Deutsche Bank to change its mind and vote for the merger.

"I do not believe that Fiorina's voice mail evidences an intent to employ improper means to persuade Deutsche Bank to vote in favor of the merger," Chandler wrote in his ruling. "Rather, Fiorina's message reflects reasonable actions taken by an executive faced with unexpected adverse information."

The judge similarly discounted Hewlett's claims that the merger integration process was not going well and that the combined company would not meet revenue projections outlined in HP's proxy statement to shareholders.

"To the extent that the plaintiffs need to prove a subjective element for this claim to succeed, they fail completely to do so," Judge Chandler wrote.

He went on to say that e-mails and so called value capture update reports introduced in the trial by Hewlett's attorneys were "immaterial."

Instead, he wrote, "The plaintiffs have been unable to prove HP misrepresented or omitted material facts about integration in the proxy contest. Instead, the evidence demonstrates that HP's statements concerning the merger were true, complete and made in good faith. Nothing in the record indicates that HP lied to or deliberately misled ISS (Institutional Shareholder Services) or the HP shareholders about its integration efforts."

The merger is scheduled to be finalized on May 7. Hewlett said Tuesday that he will not appeal the judge's decision.