Hewlett-Packard Co. and Compaq Computer Corp. have formally notified European regulators of their plans to merge, signaling HP's determination to pursue the deal despite opposition from some of its leading shareholders.
Hewlett-Packard Co. and Compaq Computer Corp. have formally notified European regulators of their plans to merge, signaling HPs determination to pursue the deal despite opposition from some of its leading shareholders.
While the two American-based companies quickly notified U.S. regulators of their intention to merge in September, the computer makers delayed filing a formal notice with European Union until Thursday for several reasons, an HP source said.
But in large part, the postponed European application enabled the companies to gauge initial U.S. regulatory reaction and make potential adjustments before submitting the deal to another regulatory body, the source said.
Although HP and Compaq are both based in the United States, the two companies have extensive operations in Europe, garnering more than a third of their revenue there. As a result, objections to the deal by European regulators could scuttle the proposed $25 billion merger.
HP is based in Palo Alto, Calif., with Compaq having headquarters in Houston.
According to a spokeswoman for the European Commission, the body which received the formal merger notification and will be conducting the antitrust review of the deal, the initial evaluation should be completed by Jan. 31. The commission is the European Unions answer to the U.S. Federal Trade Commission.
In addition to regulatory approval, the two companies must secure the support of a majority of their shareholders. While Compaq investors are reportedly heavily in favor of the merger, HP executives are facing stiff opposition from the heirs of the companys late co-founders.
In recent weeks, Walter Hewlett, an HP board member and son of company co-founder William Hewlett, has lobbied heavily against the merger, contending its a misguided attempt to revive the struggling computer maker.
Since first declaring his familys objections to the deal in November, the Hewletts recently garnered the backing of HPs largest shareholder, the David and Lucile Packard Foundation, headed by Packard family heirs.
Together, the two families control about 17 percent of HPs stock, posing a formidable obstacle for HP Chairman and CEO Carly Fiorina, whos largely staked her career on the success of the merger.
Although no shareholder votes have been scheduled, Webb McKinney, who heads HPs merger team, said earlier this month that the company expects to put the issue before investors in late January or February.
If the merger wins approval of shareholders as well as government regulators, the new HP would have a work force of about 130,000 employees in 160 countries and annual revenue of about $87.4 billion.