Judge dismisses Hewlett's HP/Compaq lawsuit
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Hewlett-Packard's takeover of Compaq Computer, the biggest merger in the history of the computer industry, is on the verge of completion today after clearing one of its final hurdles.
1 May 2002 Hewlett-Packard's takeover of Compaq Computer, the biggest merger in the history of the computer industry, is on the verge of completion today after clearing one of its final hurdles.
A Delaware judge last night threw out Walter Hewlett's lawsuit that sought to block the $18.6 billion (€20.64bn) deal, ruling that the dissident former director had failed to prove that HP did anything illegal during the bitter eight-month proxy fight.
Hewlett last night admitted defeat, saying that he was "disappointed" with the decision, but would not appeal to the Delaware Supreme Court. He also said that he would halt a recount that has delayed the final results from the 19 March shareholder vote. That leaves HP as the official winner of the vote, by a margin of 51.4% to 48.6%.
The decision represents a vindication for Carly Fiorina, HP's embattled CEO, who endured weeks of innuendo and speculation that threatened to destroy her reputation. She faced a number of allegations, the most damaging that she bribed an investor, Deutsche Asset Management, a unit of Deutsche Bank, into voting for the deal.
She was also charged with claims that HP covered up internal financial forecasts that contradicted public statements about the two companies' progress toward integration. In a memorable cross-examination, she told Hewlett's lawyer: "Sir, you are accusing the CEO of a publicly traded company of lying."
But Delaware Chancery Court judge William Chandler cleared her of any wrongdoing. "Plaintiffs have failed to prove that HP management improperly enticed or coerced Deutsche Bank into voting in favour of the merger," he wrote in his ruling. "Nothing in the record indicates that HP lied to or deliberately misled [shareholder adviser Institutional Shareholder Services] ISS or the HP shareholders about its integration efforts," he concluded.
However, the decision does not mean that the deal is now finally cleared for completion. The Securities and Exchange Commission and federal prosecutors in New York have been conducting their own investigations into Hewlett's allegations.
But the feeling among analysts and legal experts last night was that the court ruling would strongly influence the course of those inquiries.
