Thursday, March 21, 2002

Compaq investors approve HP deal

By Mark Babineck
The Associated Press

        HOUSTON — Compaq Computer Corp. investors gave their approval Wednesday for Hewlett-Packard Co.'s $20 billion acquisition of their company, a day after HP claimed victory in its own shareholder vote that was among the most contentious in history.

        Ninety percent of Compaq shareholders voted for the merger, after many gathered for a 45-minute meeting in a Houston hotel ballroom. Shareholder John Pickering, an oil industry retiree, said he was in favor of the merger even though he's a grandfather of four “that depend on the Houston economy,” which will suffer layoffs as a result.

        The merger would effectively end the life of Houston's technology pioneer, 20 years after it was born as a sketch on a restaurant napkin. But Compaq CEO Michael Capellas, who would be No. 2 executive at the new HP, said the combined company will have “a very large presence” in Houston with “a number of key product lines” based here.

        It will take several weeks to determine the official result of the HP vote, which appeared to be the closest corporate election in years. Independent proxy counters must verify each vote, and each side can challenge whether the proper people signed certain ballots.

        HP chief Carly Fiorina endured boos at her company's meeting Tuesday in California, but felt comfortable enough afterward to say she had won. “We think we have a slim but sufficient margin, and we think it's important to let people know that,” she said.

        HP director Walter Hewlett, the son of one of the company's founders and the leader of a fierce five-month campaign against the deal, insisted the HP vote was too close to call — especially because investors were allowed to change their minds several times, with only their last ballot counting.

        Once both shareholders' votes are certified, HP and Compaq can begin working together. Compaq chief executive officer Jeff Clarke said he expected the deal to take three weeks to close.

        HP and Compaq say the deal will generate $2.5 billion a year in cost savings, coming in part from an estimated 15,000 in combined job cuts, or 10 percent of the total work force. Front-office operations in Houston will be reduced drastically.


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