Feds Put HP Merger Under Microscope

Two separate government offices have asked for additional information from Hewlett-Packard in reference to its $19 billion proposed merger with Compaq Computer .

The Palo Alto, Calif.-based computer and printer maker confirmed the request in its Form 8-K (special announcement) filing issued Monday. HP said it is cooperating fully with both inquiries.

Officials with the San Francisco office of the Securities and Exchange Commission and the U.S. Attorney’s Office for the Southern District of New York are reviewing the March 19 proxy vote cast by Deutsche Bank and Northern Trust and their respective affiliated parties.

Their concern, mirroring a lawsuit filed on March 28 by HP board member Walter Hewlett who rallied against the merger, suggests that HP used its corporate muscle to sway shareholders at the last minute.

The issue has taken on a life of its own with the recent release of a corporate voicemail between HP CEO Carly Fiorina and CFO Bob Wayman in which she suggested 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.

“We have long-standing relationships with Deutsche Bank as well as with many other institutional shareowners,” HP released in a statement. “Some of them voted for the merger, others against, some split their votes, and others changed their minds — in both directions. We never acted improperly. We remain optimistic that we can close the merger on our current schedule.”

In its 8-K filing, HP said it received a subpoena on April 10 to produce information from the New York Attorney’s Office and then a separate request from the SEC. The company said the interaction with both offices was informal and

“The SEC has advised us that this inquiry should not be construed as an indication by the SEC or its staff that any violations of law have occurred, nor should it be considered a reflection upon any person, entity, or security,” HP said in its filing.

Meantime, Hewlett’s suit has been given the green light by Delaware Chancery Court judge William B. Chandler III despite HP’s motion to dismiss the complaint.

The no jury trial is set for April 23 and could result in a second shareholder vote or the dismissal of the votes in question.

The result of the proxy election is still being tallied by IVS Associates in Delaware and is not dependent on the outcome of lawsuit.

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