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EC to rule on HP-Compaq
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January 30, 2002: 3:22 p.m. ET
Shareholder vote not set; Walter Hewlett continues proxy fight to stop merger.
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NEW YORK (CNN/Money) - European regulators are expected to rule Thursday on Hewlett-Packard Co.'s takeover of Compaq Computer, a spokeswoman told CNN/Money.
The European Commission is scheduled to complete their examination by Jan. 31. But if regulators need more time to consider the merger, the review could be prolonged until May.
"Tomorrow we should get some indication one way or another," the spokeswoman said.
Regulators in Brussels are expected to issue their decision early Thursday EST.
Palo Alto, Calif.-based Hewlett (HWP: up $0.78 to $21.72, Research, Estimates) and Compaq (CPQ: up $0.58 to $11.80, Research, Estimates) submitted their merger for review to European regulators in late December.
The EC last year blocked General Electric's proposed buy of Honeywell due to antitrust concerns. However, European regulators are expected to bless the HP-Compaq combination, analysts have said.
HP also has yet to set the date for its shareholder vote and is still awaiting approval from the Securities and Exchange Commission on its preliminary proxy. "We are looking at a March timeline for the shareholder vote but there are still a number of variables," the spokeswoman said.
Separately, Walter Hewlett continued his proxy fight Wednesday against the HP-Compaq combination, claiming that large computing mergers consistently fail.
Hewlett filed a report with the Securities and Exchange Commission showing the extreme risk involved in the proposed the HP-Compaq merger. HP optimistically assumes it can succeed where others have failed, Hewlett said in a statement.
Hewlett pointed to similar past combinations, such as Compaq's own acquisition of Tandem Equipment in 1997 and Digital Equipment Corp. in 1998, and Burroughs Corp. buy of Sperry Corp. to form Unisys Corp. in 1986.
Shareholders of the acquiring companies suffered significant losses after the deals closed, Hewlett said. Though the companies projected the buys would add to earnings within the next two years, in reality each company suffered lower earnings three years later, Hewlett said.
"HP's stated rationale for the proposed acquisition of Compaq is remarkably similar to the strategic rationale put forward for each of these failed transactions," he said. "Bigger did not prove better in any of these cases, and in each transaction, integrating the two large companies was a major stumbling block to the creation of stockholder value."
Hewlett, son of one of the HP co-founders, is currently on a road show to meet with shareholders and has previously stated that HP's merger with Compaq will significantly diminish the value of shareholders' investment in HP on both a short-term and long-term basis. 
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