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HP’s Bank Dealings Under Federal Microscope

Cupertino, Calif. – Hewlett-Packard’s on-going attempt to acquire Compaq Computers was hit with problems on two new fronts late last week, the company reported today.

The San Francisco office Securities and Exchange Commission requested information regarding HP’s dealing with Deutsche Bank in the days leading up to the March 19 HP shareholder vote over the merger and the U.S. On the East Coast, the U.S. Attorney’s Office for the Southern District of New York served HP with a subpoena requesting data concerning contacts HP had with the bank.

According to several published reports HP said the SEC’s call for information ‘should not be construed as an indication by the SEC or its staff that any violations of law have occurred.’

These probes follow Walter Hewlett’s filing in late March of a complaint in the Delaware Chancery Court citing concerns over the process by which HP solicited votes for the approval of the proposed merger with Compaq, particularly from large institutional stockholders, including Deutsche Bank. The William R. Hewlett Revocable Trust was listed as co-complainant.

The final tally for the March 19 shareholder vote is expected this week. HP executives are claiming a victory by a narrow margin, while Hewlett, son of company co-founder William Hewlett, said the results are to close to call. Hewlett has battled against the $19.5 billion merger saying it is not in HP best interest.