Compaq investors vote overwhelmingly to approve merger with to Hewlett-Packard

(HOUSTON) - A company founded in a California garage and a rival that started as a sketch on a restaurant placemat are a step closer to forming a massive new computer company. <br><br>Shareholders of Compaq

Thursday, March 21st 2002, 12:00 am

By: News On 6

(HOUSTON) - A company founded in a California garage and a rival that started as a sketch on a restaurant placemat are a step closer to forming a massive new computer company.

Shareholders of Compaq Computer Corp. overwhelmingly approved Hewlett-Packard Co.'s $20 billion acquisition of their company on Wednesday.

The vote, in which 90 percent of Compaq shareholders backed the merger, came a day after HP claimed victory in one of the most contentious shareholder elections in history. The final results from HP's shareholder vote could take weeks because it is so close.

The Compaq meeting received a ho-hum reception in comparison to the HP meeting on Tuesday in which investors began lining up before dawn to get seats. About 200 Compaq shareholders failed to fill a Houston hotel ballroom during their meeting.

Most of the Compaq shareholder questions during the 45-minute meeting centered on the deal's effect on Houston.

``Initially I didn't like it,'' said stakeholder John Cummins, a retiree from nearby Spring. ``But at this stage of the game I'm going along with Compaq.''

Compaq chief executive Michael Capellas, in line to be No. 2 at the new HP, explained how the combined company would fill in market gaps for both companies, playing off Compaq's strengths in portable products and supercomputers and HP's profitable printers and business servers.

The new HP will have a presence in 103 countries and most every major U.S. corporation.

``There are very few companies that have the reach of this new company,'' Capellas said. ``It is extraordinary.''

About 15,000 of the combined companies' worldwide work force of 155,000 are expected to be laid off in the wake of the deal, including some losses at the Houston headquarters. Officials declined to comment on how many of the 10,000-plus workers in Compaq's hometown will be affected.

``There will be no question HP-Compaq will have a very large presence here,'' Capellas said. ``There will be a number of product lines that will be headquartered in Houston.''

Compaq was founded in 1982 by three executives who left Texas Instruments. They sketched their first product - a portable PC that could run the same software as IBM's new PC - on a paper placemat in a Houston eatery before presenting it to venture capitalists.

The Compaq brand name will continue on certain products under the flag of HP, founded in a Palo Alto, Calif., garage in 1938 by William Hewlett and David Packard, whose descendants vigorously oppose the deal.

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