Hewlett-Packard Co. board member Walter Hewlett and other opponents of the proposed HP/Compaq Computer Corp. merger yesterday filed with the Securities and Exchange Commission (SEC) a proxy statement asking shareholders to vote against the deal at a special HP shareholders meeting next year.
If approved by the SEC, the proxy statement will be sent out to shareholders with a card — essentially a ballot — that they can send in as their vote at an upcoming special meeting on the merger expected to take place in February. That card would count as a vote against the deal.
The merger would combine two of the biggest vendors in the global IT industry. Walter Hewlett, son of HP co-founder William Hewlett, and other heirs of Hewlett and co-founder David Packard have opposed the merger. The deal is in jeopardy because the heirs and various associated foundations opposed to the merger have a lot of combined voting power.
Walter Hewlett announced in November that he would launch a proxy fight against the merger (see story).
The proxy statement filed yesterday names Walter Hewlett, Edwin E. van Bronkhorst and the William R. Hewlett Revocable Trust and paints the merger as a risky deal that would distract management and destroy shareholder value. Van Bronkhorst is a former HP chief financial officer and a trustee or director of several Hewlett and Packard family trusts and foundations.
The statement says the combination would dilute shareholders’ interests in HP’s thriving imaging and printing business while increasing their exposure to the commodity-like PC business. The statement also says the merger wouldn’t improve HP’s consulting capabilities or its positions in the midrange and high-end server markets.
The statement also raises the specter of high risk, saying that “no significant merger involving a computer company has ever met expectations.” Lost revenue associated with the deal probably would offset or exceed the gains from synergies achieved through the merger, the statement says.
It also points out the decline in HP’s value after the proposed deal was announced, saying shareholder value has been destroyed. The market has voted against the deal twice, Hewlett’s statement says: once when HP’s stock price fell after the proposed deal was announced, and again when the price of HP shares rose after Hewlett and others voiced their opposition.