The proposed merger between Hewlett-Packard and Compaq Computer
took one large step closer to completion Thursday.
The antitrust commission of the European Union voted in favor of the transaction, currently valued at $22.83 billion, “without conditions.”
In a prepared statement the Commission said “A careful analysis of the merger… and of the competitive forces in the markets concerned has shown that HP would not be in a position to increase prices and that consumers would continue to benefit from sufficient choice and innovation.”
HP chairman and CEO Carly Fiorina was delighted by the news.
“We see it (the decision) as an encouraging step in the continuing process of satisfying regulators worldwide that this deal will provide a real stimulus for competition in information technology markets.”
The only vocal resistance to the HP-Compaq merger came from representatives of competing PC-maker German based Fujitsu-Siemens, which asked the EU to extend the investigation period.
That… and an opinion published by Walter Hewlett, on behalf of The William R. Hewlett Revocable Trust.
“We believe that the transaction is a bet-the-company move that is not appropriate for HP,” Hewlett said in a statement. “The integration risk is substantial and unacceptable, and no significant combination involving a computer company has ever met expectations. We understand that HP’s rivals raised almost no objections to the proposed merger, helping it to gain EC approval. We are not surprised; we believe Dell, Sun and IBM must be delighted at the prospect of a merger that would so greatly distract and damage two of their rivals.”
The green light buy the E.U. marks the largest U.S. transaction approved by Europe’s antitrust committee. Last year, officials turned down General Electric’s $46 billion bid to buy Honeywell.
The Beat Goes On
The news is just the latest boost to Palo Alto, Calif.-based HP’s bid to incorporate Houston-based Compaq’s products and services into its “HP Way.”
Compaq chairman and CEO Michael Capellas told investors that he felt much better about the merger seeing completion versus how the plan looked four to six weeks ago.
“All the processes are moving forward,” says Capellas. “Whether it’s filing the S-4, regulatory approval, all the things are going through.”
The feeling is somewhat mutual at HP where an internal survey of employees last week revealed that a good 65 percent were in favor of the merger.
Now that the EU and Canadian regulators approve of the deal, the computer makers will still have to face shareholders head on. And lately, that possible wedding between HP and Compaq is turning into a public relations war between HP and the founder’s children.
David Packard recently sided with the Hewlett’s decision to vote against the deal if it were to come up before shareholders and even launched a ‘Vote No HP Compaq’ Web site expressing his views.
Last week, HP retaliated with the debut of its own ‘Vote The HP Way’ support site.
Shareholders who met the January deadline are expected to cast their vote for the merger at the end of March.
