Hewlett-Packard Co. gained additional backing for its buyout of Compaq Computer Corp. as Putnam Investors, a large shareholder in both computer makers, announced it will support the merger.
Merger proponents today also touted the release of a new survey of IT professionals, commissioned by HP and conducted by Deloitte Consulting, that found a majority of HPs and Compaqs customers view the merger as having a positive impact on their business.
Putnams announcement that it will support the merger marks a significant victory for proponents of the controversial $22 billion deal scheduled to be put to a vote of shareholders next week.
The investment group is Compaqs largest shareholder and the fourth largest institutional investor in HP, which is in the midst of a bitter proxy fight over the merger.
"We believe the merger enhances the combined companies strategic and competitive positions and offers financial benefits to shareholders," Putnam said in a press release.
Putnams announcement came only hours after merger proponents were dealt a serious blow when HPs third largest institutional shareholder, Banc of America Capital Management, disclosed that it would vote against the deal.
While the boards of both computer makers have approved the merger, the deal must win the support of more than 50 percent of each companys shareholders in order to go forward. While Compaqs investors are widely expected to vote in favor of the deal next Wednesday, the outcome of HPs vote next Tuesday remains in doubt, due in large part to strong opposition by the heirs of HPs co-founders.
Walter Hewlett, a member of HPs board and son of late HP co-found Bill Hewlett, is leading a highly publicized proxy fight to kill the merger, contending the deal is a misguided attempt to revive the struggling computer maker that will ultimately seriously undermine shareholder value.
While much of the controversy has focused on the interest of shareholders, a new survey released today highlighted customer support for the deal.
The survey of IT customers of HP and Compaq showed that a majority think the merger will benefit them in two critical areas, in the companies capability to fulfill end-to-end needs with a fuller range of products and services, and lower technology costs overall.
"Despite the rhetoric, the success of this merger fundamentally hinges on the new companys ability to deliver value to customers," said Brian Fugere, principal at Deloitte Consulting, which compiled the report. "Our survey shows a strong endorsement from both Hewlett-Packard and Compaq customers. Notably, in 24 out of 26 areas surveyed, customers believe the merger will have a positive or strongly positive impact on them."
The survey was conducted via a blind Internet poll of a cross-section of 2,354 HP and Compaq customers in North America, according to Deloitte Consulting. The survey was paid for by HP, designed by Deloitte, and data was collected by Harris Interactive, the consulting firm best known for The Harris Poll.
The survey, which focused on more than two dozen customer-service areas, showed that enterprise users have largely favorable views of the deal.
"In 24 out of 26 areas surveyed," Fugere said, "customers believe the merger will have a positive or strongly positive impact on them."
For more on the proposed HP-Compaq merger, go to eWEEKs special report, "HP Courts Compaq."