New opponent to HP-Compaq
Brandes Investment Partners reportedly set to vote 25M HP shares against deal.
February 26, 2002: 6:36 a.m. ET
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NEW YORK (CNN/Money) - Another institutional investor has announced its opposition to the proposed purchase of Compaq Computer Corp. by Hewlett-Packard Co., according to a published report Tuesday.
The Wall Street Journal reported that Brandes Investment Partners, which holds about 1.3 percent of HP stock, is now on record opposing the stock deal valued at about $21 billion. HP shareholders are set to vote on the proposed deal March 19.
"Putting H-P together with Compaq is a gutsy and bold move," the Journal quoted Vinit Bodas, a partner and senior analyst at Brandes, as saying. "But our sense is that there are a lot of risks in doing that, including considerable cultural and integration risks."
The Journal said Brandes' 24.7 million HP shares as of Dec. 31 makes it the 12th-largest holder of the computer maker's shares. The paper quoted the company as saying that it is disappointed by Brandes' decision, but that it has support from many other investors.
The opposition to the deal has been led by the Hewlett and Packard families -- especially Walter Hewlett, son of the company's co-founder and an HP board member. Those family members and their charitable foundations have already said they will vote their combined 18 percent holdings against the deal.
Some other major institutional shareholders are also on record opposed to the deal, including Matrix Assets Advisors, which held 531,675 shares of Hewlett-Packard and 826,846 shares of Compaq when it vowed to vote its shares against the deal last fall.
Still several other major institutional investors have said they support the deal and HP CEO Carly Fiorina has predicted the proposed combination has sufficient shareholder support to be approved. The HP board members other than Hewlett has continued to back the deal and Fiorina.
The Journal said Brandes did not start buying HP shares until after the deal was announced in September, when it was attracted by HP's depressed share price. It said the money-management firm, which has about $60 billion, believes that HP's printing and imaging unit provides a floor to the stock price, and would like to see the company consider a spinoff of that unit, a move that is favored by Hewlett.
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Shares of HP (HWP: Research, Estimates) gained 69 cents to $19.98 in trading Monday, while shares of Compaq (CPQ: Research, Estimates) rose 10 cents to $10.60. 
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