Its Compaqs Turn: Shareholder Approval Expected

Compared with yesterday's vote by HP shareholders, today's Compaq vote should be a cakewalk, with shareholders expecting to approve the merger.

Compaq Computer Corp.s days appear numbered as shareholders are expected today to approve a $22 billion buyout of the 20-year-old company by Hewlett-Packard Co., a day after HP claimed it had won a bitter proxy fight that gave the green light to the controversial deal.

In contrast to yesterdays highly anticipated showdown between HP Chairman Carly Fiorina and leading merger opponent Walter Hewlett at a meeting that attracted about 3,000 fervent foes of the deal, todays Compaq vote is seen as somewhat of a cakewalk.

If the merger is approved, by this time next month, Houston-based Compaq and most of its 63,000 employees will be integrated into HP, which currently has about 85,000 workers. About 15,000 will lose their jobs as a result of the merger.

While todays Compaq vote lacks the drama of HPs gathering, some similarities are expected. Compaq Chairman Michael Capellas will likely offer a strong defense of the deal during a question and answer session with shareholders, just as Fiorina did the day before, although few expect hell face as formidable and unfriendly an audience as she did.

"We continue to believe that this merger will rapidly accelerate our strategy, improve overall earnings power and provide increased value for customers, shareholders and employees," Capellas said in a statement yesterday following HPs announced victory. "With the HP vote now behind us and the Compaq shareholder vote Wednesday, we are very close to making this merger a reality."

And just as Fiorina quickly claimed victory less than an hour after her shareholder meeting, Compaq Chairman Michael Capellas also is expected to declare voter approval of the deal shortly after the conclusion of todays meeting, scheduled for 3 p.m. EST at the Wyndham Greenspoint Hotel in Houston.

Such declarations of victory may appear to be a bit premature, given the final tallying of the votes could take up to two weeks, according to a representative of IVS Associates, of Newark, Del., which will conduct the official count.

Symbolic of the divisive nature of the proxy fight, the mergers most outspoken critic yesterday rejected HPs claim of victory, saying the preliminary margins are "razor thin."

"The results of todays vote are too close to call," HP Director Hewlett said at a news conference yesterday in a hotel in Cupertino, Calif. "In a proxy contest this close … it is simply impossible to determine the outcome at this time."

Nevertheless, Fiorina expressed no doubts in a news conference in Cupertino, Calif., yesterday that she had garnered more than enough votes to allow her to proceed with one of the largest mergers in high-tech industrys history.

"Given the choice between embracing the future of our industry and protecting to preserve the status quo," she said, "it appears that are shareowners today made a decision not only to embrace that change, but to lead it."

Fiorina also held out an olive branch to merger opponents to join in help shaping the new HP.

"I am hopeful that having gone through this contest that we can now put this behind us and find common ground and move on," she said.

But exactly what the company will do next remains unclear, with Fiorina emphasizing yesterday that HP must continue to abide by legal restrictions about what it can reveal about its post-merger plans until the votes are certified.

"Once we have legal closure, well begin announcing the decisions weve made," she said. "The thing that is most troublesome to both employees and customers is the uncertainty, and we want to move to remove that uncertainty as quickly as possible."

If there are no unexpected developments, such as legal challenges to this weeks voting, industry analysts predict that HP and Compaq will officially merger operations in mid-April.

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