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Compaq shareholders approve acquisition

Compaq shareholders yesterday approved the company's planned acquisition by Hewlett-Packard by a nine to one margin.

The official result of HP's shareholder vote, which closed on Tuesday (19 March), is not yet known. HP said preliminary results show that shareholders approved the acquisition by a "slim margin", according to chairman and chief executive officer Carly Fiorina.

Opposition leader Walter Hewlett, an HP board member and son of a company founder, said the results are too close to call and that he remains "optimistic" that the acquisition will be defeated.

IVS Associates is handling the vote and will certify HP's outcome. The process is expected to take several weeks.

The Compaq shareholder meeting was a more amiable affair than the HP vote a day earlier. Laughter could be heard at The Wyndham Greenspoint Hotel in Houston, as a calm Michael Capellas, chairman and CEO of Compaq, answered questions at a press conference after the vote.

"This is an unbelievable movement in terms of the industry," Capellas said. "There are few companies that have the global reach of this entity."

Capellas called the merger the highlight of his career and cracked several jokes during the press conference. HP's Fiorina, faced a much tougher crowd on Tuesday.

At HP's vote, in Cupertino, California, throngs of objectors to the acquisition lined up outside The Flint Center, one of them beating a drum and several handing out fliers calling for investors to vote against the deal. Critics grilled Fiorina during a question-and-answer session at the vote, with some past and present employees claiming that management misled them. One engineer claimed he had worked at HP more than 20 years but would quit if the merger were approved.

Capellas' toughest questions came from local reporters who asked how the deal would affect the Houston's economy. The companies have admitted that a combined HP and Compaq would have close to 155,000 employees, of which 15,000 would have to go.

Capellas tried to assuage local fears by reiterating that Houston will be a focal point of the merged company.

"Houston very clearly is strategic," he said. "We have incredibly important parts of our revenue stream based here. It is a very cost-effective place to work. The decision to move out of Houston does not carry a lot of business sense."

A number of Compaq product lines will probably play a big role in the combined company's future. So far, executives have said that Compaq's high-end fault-tolerant computers, low-end servers and storage products are the biggest complements to HP's strengths in Unix servers, printing and imaging.

Objectors to the deal have said that a merged company would be shackled by Compaq's large PC business, claiming this market is too competitive to generate large profits.

HP and Compaq executives position the deal as a way of offering customers a variety of gear and then provide lucrative professional services as back up. The company could, therefore, compete more effectively against IBM for service-driven business.

The launch of the new company could begin next month, Capellas said, adding that the Compaq brand may be retained for some products. Compaq also plans to continue its sponsorship of stadiums in Houston and San Jose.

"I do believe that naming rights [for the stadiums] are an important part of contributing to the local environment," Capellas said.

Like Fiorina, Capellas gave lead dissenter Hewlett credit for never backing down from his crusade against the merger.

"Walter has certainly given the strength of his convictions," Capellas said.

Hewlett insists that the preliminary vote results show a "razor-thin" margin between the two camps and that declaring victory at this time is an error on HP's part.

Capellas said that Compaq has spent $50m (£35m) over the past six months to help push the acquisition through.

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