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Vote on HP-Compaq in March
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January 16, 2002: 7:57 p.m. ET
Walter Hewlett sends first letter to HP shareholders against $22B merger with Compaq.
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NEW YORK (CNN/Money) - Compaq Corp. CEO Michael Capellas expects a shareholder vote on its pending $22 billion merger with Hewlett-Packard Co. in March, a spokesman confirmed Wednesday.
Capellas made the remarks after world's No.2 PC maker reported fourth-quarter profit ahead of analyst expectations Wednesday.
Regulators for the European Union are anticipated to make their decision on the HP-Compaq merger by Jan. 31, Compaq spokesman Arch Currid said. The companies have also substantially complied with a second request from the Federal Trade Commission, Currid said.
"We expect something from the FTC this quarter," Currid said. "We said all along that we expect regulatory [approval] to be completed by the end of first quarter and complete the merger by the first half."
Shares of Compaq (CPQ: down $0.30 to $11.10, Research, Estimates) dropped nearly 3 percent Wednesday while Hewlett-Packard (HWP: down $0.66 to $22.42, Research, Estimates) also shed nearly 3 percent.
Separately, Walter Hewlett, son of the one of the HP co-founders, continued to rally shareholders against the merger. In his first letter to HP stockholders, Hewlett said a merger with Compaq will significantly diminish the value of shareholder investment in HP on both a short-term and long-term basis.
"We believe that Hewlett-Packard needs to focus on what it does well, and to change and grow organically, with targeted tactical acquisitions—a strategy that has proven to be successful in the technology industry," Hewlett said.
Hewlett has launched a proxy battle to stop HP from acquiring Compaq and began meeting with institutional investors a month ago.
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. 
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