David Packard, son of the late co-founder of Hewlett-Packard Co., has joined Hewlett family members in denouncing the companys controversial plan to buy out Compaq Computer Corp.
Packard, who owns 1.3 percent of HPs stock, voiced his opposition to the merger late yesterday after HP heir and company board member Walter Hewlett issued a statement on behalf of family members condemning the deal. The Hewlett family controls about 5 percent of HPs stock.
Hewlett, who initially joined in a unanimous decision supporting the merger two months ago, yesterday criticized the deal as increasing HPs exposure to the "unattractive PC business" while weakening stockholders share in the more profitable printer business.
Reached for comment after the Hewlett statement was released, Packard admitted that he, too, opposed the merger.
"I agree with all the things Walter said," Packard told the Wall Street Journal and CNBC yesterday.
But Packard, who resigned from the companys board in 1999, said he wasnt speaking on behalf of the Packard family foundation, the computer companys biggest shareholder, which controls 10 percent of the stock. The $5 billion foundation has yet to voice its opinion on the merger.
In the face of mounting opposition, HPs board yesterday voted once again in favor of the proposed $20 billion acquisition of Compaq, with the exception of Walter Hewlett. Board members also threw their support behind Carly Fiorina, the companys chairman and chief executive, who has put her career on the line in pursuing the merger.
"The board thoroughly analyzed this transaction and unanimously concluded this is the very best way to deliver the value our shareowners expect," said Dick Hackborn, former chairman and executive vice president of HP. "Under Carlys leadership, the new HP will continue to be an innovation leader with a culture focused on trust, teamwork, accountability and contribution."
Nevertheless, the rejection of the merger by heirs of the late co-founders of the company, William Hewlett and David Packard, has significantly undermined the deal, analysts said.
"This is clearly a setback," said Andy Neff, a market analyst with Bear Stearns in New York. "We would say the odds of the deal closing have dropped from 90 percent to only about 60 percent."
"At this point, the chances of the deal going through have to be 50-50, at best," said Dan Niles, a market analyst with Lehman Brothers in San Francisco. "Its going to be one historic battle."