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News > Deals
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FTC clears HP-Compaq
Agency accepts $22 billion HP-Compaq merger without conditions, day after ISS endorsement.
March 6, 2002: 7:24 p.m. ET

graphic NEW YORK (CNN/Money) - As expected, the Federal Trade Commission cleared Hewlett-Packard Co.'s $22 billion merger with Compaq Computer Corp. late Wednesday.

The vote from the FTC's five commissioners was unanimous and accepted the transaction without conditions, a spokesman said.

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The agency said that it conducted an extensive investigation of the merger's effect on the market for personal computers, servers and microprocessors but did not find any reason to believe that it would impair competition.

"Completion of the FTC review marks a major milestone in the approval process, and we are now focused on winning the shareowner vote," HP Chairman and CEO Carly Fiorina said in a statement.

Dissident Walter Hewlett, son of one of the HP co-founders, expressed his disappointment with the decision. HP shareholders should be concerned since rivals Sun Microsystems, Dell, and IBM have not objected to the transaction, Hewlett said.

"We all know that regulators vociferously express concern when there is even a whiff of competitive advantage in a merger," he said. "This obviously did not happen here with HP's proposed acquisition of Compaq."

Hewlett has launched a bitter proxy battle to stop the HP-Compaq merger.

CNN/Money reported last week that the FTC would approve the merger. The agency's endorsement occurred a day after the transaction received the backing of Institutional Shareholder Services, a key proxy advisory firm. ISS recommended that its clients, which control a significant block (23 percent)  of HP shares, vote for the deal.

ISS Wednesday also recommended that Compaq shareholders vote in favor of the HP-Compaq merger. HP offers Compaq a premium in the merger and allows shareholders to participate in a computer services company that combines two strong technology brand names. Compaq would also have greater profit opportunities combined with HP than alone, ISS said.

"Finally, there appear to be no other comparable strategic alternatives on Compaq's horizon," the proxy advisory service said.

The FTC's approval also comes nearly two weeks before Hewlett-Packard shareholders are set to vote on the merger. HP stockholders will vote March 19, while Compaq will vote the next day. The companies expect to close the transaction in early April.

European regulators have already cleared the merger without adjustments. The European Commission, the executive body of the European Union, said in January that the deal does not raise competition concerns in Europe.

Shares of HP (HWP: down $0.13 to $20.05, Research, Estimates) dropped 2 percent Wednesday, while Compaq (CPQ: up $0.10 to $11.08, Research, Estimates) finished higher. graphic

  RELATED STORIES

Approval on HP-Compaq next week -- Feb. 28, 2002

ISS backs HP-Compaq merger -- March 5, 2002





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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

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