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HP Vote Shows Green Light For Merger

The majority of votes are counted and Hewlett-Packard is again claiming victory.

The Palo Alto, Calif.-based computer and printer maker said late Wednesday that the results of its March 19 proxy vote show an overwhelming approval of the $19 billion proposed merger with Compaq Computer .

Although the vote is not certified, a preliminary tally prepared by IVS Associates' independent inspectors of election in Delaware, shows that HP shareowners voted in favor of the merger by a margin of approximately 45 million shares.

Votes "FOR" the merger totaled approximately 837.9 million (51.4 percent). Votes "AGAINST" the merger totaled approximately 792.6 million (48.6 percent), of which almost half were affiliated with the Hewlett and Packard families and foundations. An insignificant number of votes cast remain unresolved.

HP was happy to point out that shareowners not affiliated with the Hewlett and Packard families and their foundations voted for the merger by a margin of roughly 2:1.

"We are gratified the preliminary vote tally validates that HP shareowners voted the majority of their shares in support of the merger," said Carly Fiorina, HP chairman and chief executive officer. "We are eager to put this difficult period behind us and look forward to doing business as the new HP."

But the deal is not sealed yet.

"As we stated previously, the margin of this vote was extremely narrow," Hewlett released in a statement. "These are preliminary results and both sides will have the opportunity to examine and challenge the proxy tabulation prior to final certification. In addition, the pending litigation with Hewlett-Packard in the Delaware Chancery Court must be heard before any final outcome is determined.

The lawsuit filed on March 28 by Hewlett suggests that HP used its corporate muscle to sway shareholders such as by Deutsche Bank's Deutsche Asset Management arm and Northern Trust and their respective affiliated parties at the last minute.

The trial is scheduled to begin April 23rd in in Wilmington, Delaware.

Then there is the issue of an investigation by the San Francisco office of the Securities and Exchange Commission and the U.S. Attorney's Office for the Southern District of New York.

The two federal offices are also looking at any last minute shenanigans including a corporate voicemail between HP CEO Carly Fiorina and CFO Bob Wayman in which she suggests that HP might "have to do something extraordinary for those two (Deutsche Bank and Northern Trust ) to bring them over the line."

While HP is acknowledging the conversation, it denies any wrongdoing. Deutsche Asset Management is also defending its position.

"The decision was made by Deutsche Asset Management's proxy committee, who exercised its independent judgment solely in the interest of its clients," Deutsche Asset Management spokeswoman Missy DeAngelis told Reuters Tuesday.

It will be interesting to see how the lawsuit plays out considering Deutsche Asset Management's shares accounted for 20 million votes and would not be a factor to the final tally if they are thrown out.

But Walter Hewlett might still be able to call for a re-vote if the lawsuit falls his way.

If the dissident HP board member does demand a recount, both parties will participate in a review of the proxies, which HP expects would begin immediately and last about a week.

In addition, the final tally is subject to a challenge process that could take another one to two days. Following completion of any recount and challenge, the independent inspectors of election will release a final, certified vote tally.