The David and Lucile Packard Foundation may cast the vote that determines whether the Hewlett-Packard Company completes its proposed $20 billion takeover of Compaq Computer Corp., the Wall Street Journal and CNN/Money report.
With a 10.4 percent stake in the company, the Los Altos, California-based foundation is HP's largest shareholder, placing it at the center of a heated corporate battle. Last week, in an unexpected move, Walter Hewlett, a member of HP's board of directors and chairman of the William and Flora Hewlett Foundation, and his sisters Eleanor Hewlett Gimon and Mary Hewlett Jaffe, issued a statement opposing the merger and asserting that HP was more valuable as a stand-alone company. David Packard, Jr., quickly backed up the Hewletts by saying he, too, opposed the merger. Although Packard does not sit on the twelve-member board of his family's foundation, his three sisters — Susan Packard Orr, Nancy Packard Burnett, and Julie E. Packard — and two of their husbands do.
The Menlo Park, California-based Hewlett Foundation, which owns 0.73 percent of HP, made a preliminary decision to vote its shares against the merger with the help of its own board members and outside advisers. The Packard Foundation, the nation's fourth-largest grantmaker, has also sought outside help and hired an independent consultant to advise it on how to vote its nearly 200 million shares. However, a foundation spokeswoman told CNN/Money that the family would make the ultimate decision. Together, the two families and their related trusts and foundations own nearly 18 percent of the company.
Hewlett-Packard CEO Carly Fiorina delivered HP's standard presentation about the merger to the Packard Foundation after the deal was announced in September, but a person close to the company told the Journal that HP management would pay special attention to the foundation in the coming weeks in an effort to garner its support of the deal. Fiorina will try to convince the foundation that the merger with Compaq would provide significant cost savings and add to HP's lineup of products and services. Critics of the deal maintain that integrating the two companies would cause customers to turn to rival computer makers.
Packard Foundation CFO George Vera told the Journal that he doesn't expect the foundation to make a final decision until January. A shareholders' vote on the merger is expected in the first quarter of 2002.