Hewlett claims rebuffed by HP as inaccurate

8 January 2002 Directors of hardware giant Hewlett-Packard (HP) have launched a counter attack against rebel board member Walter Hewlett, who claims he had been intentionally misled by HP lawyers to vote in favour of a merger with rival Compaq.

In a statement sent to the US Securities and Exchange Commission (SEC) in December 2001, Hewlett, who is the son of HP co-founder William Hewlett, said he was pressured by the board to vote in favour of the merger – a deal which he was openly opposed to.

Hewlett, who voted in favour of the merger, also says HP lawyer Larry Sonsini lead him to believe that a board level vote against the merger would be wasted, and may have lead to Compaq asking for a higher price for the deal. Instead, Hewlett says he was advised to vote against the merger as a shareholder.

HP’s eight other board members have now responded to Hewlett in a SEC filing that labels his allegations as “inappropriate and inaccurate”. They say that Hewlett was never told that a vote against the deal would translate into a higher price. They also point out that Hewlett missed several board meetings at which the merger was discussed.

The accusations are heavily based on subjective interpretations of events surrounding the deal. Hewlett has already publicly dismissed the letter from his fellow board members as “a careful construct of fine lines and half truths.”

The children and family foundations of the original founders of HP have opposed the merger between Compaq and HP since it was announced in September 2001. Opponents of the deal claim that big technology company mergers frequently fail and that acquiring Compaq could increase HP’s dependence on the volatile and low margin personal computer business.

However, proponents of the merger have been given a boost by an announcement made by Compaq on the same day as the new letter from the board of directors. Compaq raised its expectations for the fourth-quarter of 2001, a move that industry pundits believe could have been due to growth in its high-end server systems rather than its PC business.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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