Compaq's Capellas Sees HP Merger Vote in March


Compaq Computer shareholders are likely to vote on its proposed merger with competitor Hewlett-Packard in March, Compaq CEO Michael Capellas said Wednesday.

"Our expectation is that we'll be looking for a vote in March," Capellas says. "I don't think we can pin down a date. There are still too many moving parts."

The companies announced their plans for a near $25 billion merger on Sept. 4, but they have since come under pressure from investors, including members of the Hewlett and Packard families. The families, who are related to the company's founders and who together own 18 percent of the firm, have said they plan to vote against the deal. That has called the likelihood of shareholder approval into doubt.

Both Compaq's Capellas and Hewlett-Packard CEO Carly Fiorina have vigorously defended the deal, saying it is the best plan for both companies. But Compaq has also said that it is continuing to work on a strategy that will enable it to remain competitive if the merger doesn't occur.

Capellas made the comments after announcing fourth-quarter earnings that declined from a year ago but which were better than most Wall Street analysts had expected.

The word on the vote also came on a day in which Walter Hewlett, son of the founder of Hewlett-Packard stepped up his efforts to sway voters to vote against the merger by sending a letter directly to HP shareholders. In the letter, Hewlett said the merger would bloat HP's commodity-like business of PCs and dilute the value of its printing franchise.

Capellas, who along with Fiorina has been talking to institutional investors and company employees about the value of the merger, says he intends to reach out to retail investors through the Internet and through a letter campaign.

"We absolutely have a plan to reach retail and quite frankly we have our [proxy solicitor working on that,"Capellas says.

He says he is encouraged by how Compaq has been executing despite the time spent in recent months working on the merger.

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