WASHINGTON — Federal regulators on Wednesday approved the proposed $22 billion merger of Hewlett-Packard Co. and Compaq Computer Corp., a deal that would be the biggest in high-tech history.
Announcing the decision, the Federal Trade Commission said it voted to close its antitrust investigation of the proposed deal. The 5-0 commission vote requires no additional action from the companies to meet antitrust requirements.
The merger still faces a tough shareholder vote, with Hewlett and Packard family interests opposing it.
The FTC “conducted an extensive investigation of the merger’s effect on competition in markets for personal computers, servers and microprocessors, among other products,” the agency said. “The commission did not find reason to believe that the proposed transaction would impair competition in any relevant market.”
HP Chairwoman and Chief Executive Carly Fiorina said the FTC decision “validates our conviction from the outset that the merger can only enhance competition throughout our markets.”
“We are now focused on winning the shareowner vote,” she said.
A Compaq spokesman did not immediately return calls seeking comment.
HP shareholders are scheduled to vote on March 19 and Compaq shareholders are to vote the next day.
HP, based in Palo Alto, Calif., and Compaq, based in Houston, believe merging will improve the economics of their struggling personal computer divisions and generate $2.5 billion in annual savings. The deal also would make them dominant in several growing technology markets, especially corporate computing and high-tech services.
European and Canadian antitrust officials also have approved the merger.
On Tuesday, Institutional Shareholder Services, an influential research firm based in Rockville, Md., said HP’s acquisition of Compaq could be an excellent long-term move despite its sizable risks.
But Hewlett and Packard family interests oppose the merger.
Walter Hewlett and other opponents worry that absorbing Compaq into HP would be a difficult and distracting process, and that Compaq would dramatically increase HP’s exposure to the slumping PC business at the expense of the profitable printing and digital imaging division.
HP and Walter Hewlett have been locked for months in a bruising, political-style campaign for shareholder support, and it is expected to only intensify as the vote gets closer.
In a statement Wednesday, Hewlett said, “We all know that regulators vociferously express concern when there is even a whiff of competitive advantage in a merger.”
“We believe that HP stockholders should be concerned when competitors like Sun, Dell and IBM don’t object to a transaction that is supposed to add value to HP,” he said.
More than 20 percent of HP shares, including those held by the Hewlett and Packard families, are lined up against the acquisition.
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