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HP still in EC talks
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January 24, 2002: 6:33 p.m. ET
European regulators expected to rule on HP-Compaq merger by Jan. 31.
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NEW YORK (CNN/Money) - Hewlett-Packard Co. is continuing negotiations with the European Commission regarding its $24 billion takeover of Compaq Corp., a source with knowledge of the situation told CNN/Money.
The European Commission is still expected to rule or give the HP and Compaq feedback on the planned merger by Jan. 31, a Compaq spokesman said.
European regulators are scheduled to complete their examination by that date but, if regulators need more time to consider the merger, the review could be prolonged until May.
"We are just waiting for [the EC] to provide their response," Compaq spokesman Arch Currid said.
Palo Alto, Calif.-based Hewlett (HWP: up $0.47 to $22.63, Research, Estimates) and Compaq (CPQ: up $0.68 to $12.05, Research, Estimates) submitted their merger for review to European regulators in late December.
Hewlett Packard has so far fulfilled all the requests from the EC, HP spokeswoman Rebeca Robboy said.
"We hope that we have satisfied the Commission that our deal will not lead to any lessening of competition in the IT industry," she said.
HP-Compaq have yet to set the date for the shareholder vote on the merger, which is expected sometime in late February or early March.
Since announcing their merger in September, the HP-Compaq merger has faced considerable opposition from analysts and shareholders. In early December, a key shareholder, the David and Lucille Packard Foundation, made a preliminary decision to vote against the merger. The Packard Foundation holds more than 10 percent of HP's shares. Other heirs of the founding Hewlett and Packard families also are opposed to the merger. Combined, the Packard Foundation and the heirs hold roughly 19 percent of HP's shares.
Walter Hewlett, son of one of the HP co-founders, is currently waging a proxy battle to stop the merger. Hewlett, on Wednesday, claimed that HP was misleading shareholder and that the HP-Compaq merger would dilute HP stockholders' interest in the profitable imaging and printing business.
However, analysts expect the merger, which has already been sanctioned by Canadian regulators, to easily gain approval from the EC. 
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