HP Takes Merger Matters To The Troops

January 28, 2002 (PLANSPONSOR.com) - Steps are being taken to win the hearts and minds of workers - both by fans and critics of the proposed merger of Hewlett-Packard and Compaq, despite their relatively small control of voting stock.

A recent internal Hewlett-Packard (HP) poll found that nearly two-thirds of workers surveyed supported the $24 billion merger of the firms, according to a Reuters, citing a company filing.  The filing said that 65% of employees surveyed in a poll ended January 9 supported the merger, despite the projected loss of 15,000 jobs from the merger.

Those numbers are higher than the 55% support cited in a similar poll taken in mid-November.  However, employees own less than 3% of HP stock, according to Reuters. 

Family Feud

Opponents of the merger include sons of the firm’s co-founders, and the Packard Foundation, Hewlett-Packard’s largest shareholder (with 10.4% of HP’s outstanding shares).  All in all, Hewlett and Packard family interests now have about 18% of HP shares aligned against the proposal.

Walter Hewlett, a dissident H-P board member leading the fight against the merger, has launched a proxy fight against the deal – and on Friday he even launched a Web site, www.votenohpcompaq.com .  Last week, David Woodley Packard accused HP CEO Carly Fiorina of misappropriating his father’s (Dave Packard) words to pitch the need for the proposed Compaq-HP deal.  H-P had cited Packard’s words, ‘to remain static is to lose ground’ in support of the need to move on with the merger.  In full-page ads, Packard recalled another of his dad’s sayings – ‘More companies die of indigestion than starvation’ – as a refutation of the need for the acquisition.

HP is also planning to launch a dedicated pro-merger Web site that will be separate from its current corporate site, according to CNET.com, citing sources.

Carly Sign-On?

Fiorina has been out pressing the flesh among the HP workforce.  Reuters notes that about 76% of around 1,300 workers gave the proposed deal a thumbs-up in a December 10 poll after a meeting with the CEO.  Senior executives have shown support in the 90% range after such controlled events, according to the report.

However, Packard, who has been especially critical of the job cuts, says the Hewlett-Packard board should commission an independent survey that would show how far employees trusted and were loyal to management.

As the battle heats up, European Community antitrust regulators are expected to weigh in this week – either with an approval or a call for more review time.  Meanwhile, the Federal Trade Commission and SEC haven’t yet taken a position on the matter.

The companies are hoping to bring the issue to a shareholder vote as early as March.