Compaq Shareholders OK Merger With HP

Compaq Computer Corp. shareholders on Wednesday approved the company’s proposed $20-billion merger with Hewlett-Packard Co. in a vote as routine and decisive as HP’s was not.

In contrast to the conflict-ridden HP shareholder vote Tuesday that left the outcome of the merger in doubt, Compaq shareholders ratified by a 9-to-1 margin what would be the largest merger in computer history.

Retired chemical engineer John Pickering was typical of Compaq shareholders who attended the company’s 45-minute meeting in a Houston hotel ballroom.

“I feel that the two companies are in a struggling situation,” said Pickering, who holds 600 Compaq shares. “But the two together will be able to challenge any other leader in the industry. IBM is the obvious one.”

The deal was vigorously contested by HP director Walter Hewlett, who argued that a merger with Compaq would stick HP in the money-losing market for personal computers and siphon earnings from the company’s profitable printer business.

Although results from both shareholder votes are not likely to be official for weeks, Compaq Chief Executive Michael Capellas on Wednesday said he was confident that the final tally of HP votes will favor the merger. Hewlett has said the vote was “too close to call.”

“They would not have announced it without due care,” Capellas said of HP CEO Carly Fiorina’s claim of victory.

The two companies in September announced their plans to merge on the premise that a combined company would be better able to compete in an industry racked by recession and unprecedented cutbacks in technology spending.

A merger, the companies argued, would let them slash $2.5billion in annual costs, combine their product lines to offer soup-to-nuts technology for large global companies, and compete more effectively with rivals IBM Corp., Dell Computer Corp., and Sun Microsystems Inc.