14 March 2002 Bank of America Capital Management, one of Hewlett-Packard’s (HP) largest shareholders, has revealed that it will vote against the proposed mega-merger with rival Compaq.
The US banking group holds 54 million shares – about 2.8% of the company’s stock – but only has the authority to vote on 6.5 million of those shares. Nevertheless, the reasons for its opposition to the deal echoed widespread concerns that the combined company would be over-reliant on the low-margin PC business.
Dissident board member Walter Hewlett has voiced the same argument in his battle to block the highly controversial deal.
Bank of America is the latest of HP’s well-regarded institutional investors to publicly oppose the deal in the run-up to the 19 March shareholder vote. The California pension fund, Calpers, and US banking group Wells Fargo recently declared that they will vote against the deal.
However, Putnam Investments, Compaq’s largest stockholder – and which also holds a significant stake in HP – confirmed that it will support the $22 billion (€25bn) merger. Advisory group Institutional Shareholders Service (ISS) also recommended approval of the deal, but this seems not to have swayed as many investors as originally expected.
Both sides – HP management and Walter Hewlett – are already claiming victory. Analysts say that the final outcome is too close to call.