board member and co-founder’s son Walter Hewlett filed a lawsuit Thursday in the Delaware Chancery Court claiming that the March 19 shareholder vote was unjustly influenced at the last minute.
HP is currently looking at a $20 billion merger with Compaq Computer
The complaint stems from reports that Deutsche Asset Management, a unit of Deutsche Bank and one of HP’s top 20 investors, was contacted by HP and that the Palo Alto, Calif.-based computer and printer maker used “financial inducements not available to other shareholders.”
Deutsche Bank, which owns 1.3 percent of HP stock was expected to vote against the merger, but changed its mind at the last minute. The company has not commented on either the vote or the suit.
In the closing days of the proxy battle, Deutsche Asset Management helped HP prepare a new $4 billion credit facility in case the merger is successful.
In a statement issued by Hewlett and the William R. Hewlett Revocable Trust said they have “asked the Court for expedited proceedings so that these very important issues can be resolved as soon as possible. Mr. Hewlett and the Trust want to ensure that the ultimate outcome of the HP stockholder vote on March 19 was determined in a full, fair and lawful manner.”
Hewlett said if the matter is closed and the merger were to go through he would “do everything he can to support the successful implementation of the merger.”
Representatives with HP were quick to comment.
“We believe this suit is completely without merit and intend to vigorously defend it,” said a company spokesperson in a prepared statement. “We find it regrettable that Mr. Hewlett has chosen to resort to baseless claims without regard to the impact of his false accusations on HP’s business reputation and employees.”
A few hours after the historic vote on March 19, HP said it held a “slim but sufficient” margin enough to claim victory. Compaq shareholders voted in favor of the merger by a 9-to1 margin the next day.
At the time Hewlett refused to concede the contest and said the vote was too close to call.
Election commissioners with IVS Associates are currently counting the proxy votes in Delaware. The firm may not come up with a final tally for another week.
But that hasn’t slowed down either HP or Compaq. Both companies said Wednesday that they will “continue to move forward aggressively with the integration and launch planning, so we can hit the ground running shortly after the legal close.”
HP Tuesday filed information with the Securities and Exchange Commission (SEC) saying it is on track for an April-May rollout of the combined company and has boosted the number of HP and Compaq people working on Post-Merger Integration “clean teams.”
The announcement means there are now 1,200 employees dedicated to making the two companies compatible.
Going into the proxy vote, some 22 percent of the votes had been publicly voiced though opponents to the merger, including a large block made up of Hewlett,
David Packard, the William R. Hewlett Revocable Trust and its trustees.
Other large groups like The New York public pension fund and California
Public Employees’ Retirement System (CalPERS), Brandes Investment and
Bank of America had also come out against the merger.
Proponents were showing a mere 8 percent of shareholders behind their
cause, but those who favored the merger included heavyweights like the
Federal Communications Commission, the European Union, Banc One
Investment Advisors and Intel
. An additional 10 percent more were counted on with the blessing of Institutional
Shareholder Services, which advised nearly 1,000 clients including
fund companies on corporate issues to support HP and Compaq.
And while individual shareholders were not expected to decide the fate of the mega-merger, a random sampling of voters at the Flint Center in Cupertino, Calif. on March 19 said they had actually changed their mind in favor of the proposal based on HP CEO Carly Fiorina’s persuasive arguments.