LOS ANGELES (voa) – The biggest merger plan ever between computer makers, a $25 billion deal to unite the Hewlett-Packard and Compaq companies, has been dealt a huge setback by shareholders’ opposition.
A charitable foundation that owns the biggest block of shares in Hewlett-Packard says it will vote against the merger.
The (David and Lucile Packard) Foundation, which was created by family members of Hewlett-Packard’s founders, owns more than 10 percent of the company’s shares. Last month, two sons of the company’s founders (Walter Hewlett and David Woodley Packard) also said they will vote their 7.5 percent share of HP stock against the merger.
With nearly 18 percent opposition from the founders’ own families, some analysts say the merger plan is now unlikely to go forward. A Hewlett-Packard merger with Compaq would create an $87 billion-a-year computer company, larger than any other except IBM.
The two companies issued a joint statement Friday from their headquarters in Texas and California, saying they are disappointed, but still committed to their plans. Hewlett-Packard and Compaq say a merger would increase their competitive strengths at a time when the computer business is in a steep downturn. A shareholders’ vote is not expected until at least February.
Share prices for Compaq, which is seen as the weaker of the two companies, slumped Friday, while Hewlett-Packard shares rose sharply.
Some information for this report provided by AP, AFP and Reuters.
