SEC probes Hewlett-Compaq vote

12 April 2012

AMERICAN computer giant Hewlett-Packard has been subpoenaed by New York law officials over its lobbying of shareholders including Deutsche Bank for its £15bn buyout of Compaq Computer.

The Securities and Exchange Commission has also requested documents concerning HP's relationships and communications with Deutsche Bank and affiliated parties, and communications regarding the lobbying.

In a filing with the SEC, HP said: 'We have long-standing relationships with Deutsche Bank as well as with many other institutional shareowners. Some of them voted for the merger, others against, some split their votes, and others changed their minds - in both directions.'

HP said the SEC has advised it that the inquiry should not be viewed as an indication that any violations of law have occurred. 'We never acted improperly,' it added. 'We remain optimistic that we can close the merger on our current schedule.'

The subpoena, from the US Attorney's office for the southern district of New York, also concerns the voting of North Trust, another institutional investor.

The investigations come amid a legal challenge to the merger by dissident shareholder Walter Hewlett, son of HP's founder. He claims chief executive Carly Fiorina and top management pressured Deutsche Asset Management into voting a 17m-share block in favour of the deal. His suit is set for trial next week.

HP was forced last week to defend its lobbying after a private voicemail surfaced in the US Press in which Fiorina reportedly told finance chief Bob Wayman the group 'may have to do something extraordinary' to win the backing of two large institutional shareholders. The voicemail was sent on 17 March, two days before the merger vote.

HP has said that it has won that vote by a slim margin but is waiting for a final tally. The merger is also on hold as HP prepares to defend itself in court against Hewlett.

Wayman said last week: 'We spent countless hours presenting the business value of our position up until every vote was cast, but we never, ever crossed any ethical or legal lines.'

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