Prior to a crucial shareholder vote last month, Hewlett-Packard Co. Chairman Carly Fiorina left a message telling her chief financial officer that they may need to “do something extraordinary” to persuade two major investors, including Deutsche Bank, to vote in favor of the companys buyout of Compaq Computer Corp., according to a newspaper report.
While the voice mail message, obtained by the San Jose Mercury News, doesnt detail what those efforts might be, it appears to confirm claims by Walter Hewlett, the leading opponent of the buyout, that HP pressed the banks subsidiary, Deutsche Asset Management, to switch its vote shortly before a March 19 shareholder election on the merger.
However, Fiorinas comments dont support Hewletts allegations, made in a lawsuit filed March 28, that HP threatened to withhold business from Deutsche Bank if it failed to support the $19 billion acquisition.
“We never acted improperly, as we will prove in court,” HP CFO Robert Wayman told the newspaper.
While HP declared it won the shareholder vote based on its preliminary estimates, the final results have yet to be officially released. In his lawsuit, Hewlett claims the winning margin amounted to less than 1 percent, raising the potential that the votes of one institutional investor could have swung the election in either sides favor.
In the message sent the night of March 17, less than two days before a special shareholder meeting in Cupertino, Calif., Fiorina urged Wayman to contact a representative of Deutsche Bank.
“If you dont get the right answer from him,” the chief executive says, “then you and I need to demand a conference call, an audience, etc., to make sure that we get them in the right place.”
Fiorina also acknowledges that shes worried about how another major institutional investor, Northern Trust, might vote.
“Weve seen a piece of their votes move against us, and were nervous,” she tells Wayman in the phone message.
In his lawsuit filed in Delaware Chancery Court, Hewlett claims that Deutsche Asset Management voted about 17 million shares in favor of the deal after it was told it would lose HPs business if it failed to support the merger. Hewlett also claimed that HP executives knowingly misled investors about projected earnings and savings that would result if the deal went through.
HP denounced those claims as “baseless” and denies it acted improperly in its lobbying efforts, or that it misled shareholders about any details of the merger.
But HP was dealt a setback this week when a Delaware judge rejected the companys bid to have the case thrown out; the case will go to trial in Wilmington, Del., on April 23.
