Supporters of the planned HP-Compaq merger have received two significant victories this week. The FTC has announced it will not block the merger, and Institutional Shareholder Services, which advises many of HP’s largest shareholders, also announced it is backing the deal.
Commenting on its decision, the FTC said, It now appears that no further action is warranted by the commission at this time Accordingly, the investigation has been closed.
HP chairman Carly Fiorina called the decision a major milestone toward completion of the deal. It validates our conviction from the outset that the merger can only enhance competition throughout our markets, she said.
Compaq chairman Michael Capellas said the FTC decision permits the companies to focus on the shareholder vote. With the FTC approval, it is clear that we are building momentum in the marketplace.
Meanwhile ISS, a Rockville, Md.-based firm that provides advice on mergers and other proxy contests to more than 500 institutional investors, endorsed the HP-Compaq merger. The deal will strengthen HP as a whole, freeing capital to invest in its successful imaging and printing unit, ISS concluded.
The burden of proof was really on them, Patrick McGurn, ISS’s director of corporate programs, said Wednesday. We started off with the same, knee-jerk reaction as Walter Hewlett did. Hewlett, an HP director and son of the company’s co-founder, has staunchly opposed the deal.
ISS’ support is considered vital for the merger. The firm’s clients hold roughly 23% of HP’s stock, according to the company. Not all of those institutions are expected to follow ISS’ recommendation, but many investors, including Barclays Bank plc and several index funds, are committed to voting along with ISS. Hewlett-Packard shareholders are set to vote on the merger March 19.