A Delaware Chancery Court judge said Monday a lawsuit filed last month by Walter Hewlett can proceed.
The company co-founder’s eldest son and board member opposes Hewlett-Packard’s
now $19 billion proposed merger with Compaq Computer
. Hewlett claims HP used its corporate muscle to sway shareholders at the last minute.
“We are pleased with the Court’s decision to deny the motion to dismiss and are grateful that the Court took up this issue on such short notice,” Hewlett released in a statement. “The discovery process is currently ongoing and we look forward to the trial later this month.”
The trial, set for April 23 could result in a second shareholder vote. HP was not immediately available for comment.
Chancellor William B. Chandler III has set aside three days for Hewlett and HP to argue the case, after which he could decide to toss out certain shareholder votes from the March 19 proxy election. The result of that election is still being tallied by IVS Associates in Delaware and is not dependent on the outcome of lawsuit.
Hewlett’s March 28 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.
A three-hour hearing held Sunday, April 7, regarding HP’s motion to dismiss the complaint ended with a pledge from the chancellor to hold off any decision till today.
Despite his opposition to the merger, Hewlett said he remains committed to do everything he can “to support the successful implementation of the merger.”
On March 19, immediately following the shareowner meeting, at Carly Fiorina’s encouragement, Sam Ginn, chairman of the board’s nominating and governance committee, met with Mr. Hewlett to reach out and re-establish a constructive working relationship. On Wednesday, March 27, the nominating committee convened all of the independent directors into executive session, including Mr. Hewlett, to continue these discussions. Based on these deliberations and representations made by Mr. Hewlett in the meetings, the HP board unanimously determined to re-nominate him.
But when the suit became public on March 28, HP said it would not seek to re-nominate Hewlett for the company’s board of directors.