HP faces subpoena over Compaq vote

A merger would be the largest technology deal ever

Hewlett-Packard, the computer company trying to complete a $19bn merger with rival Compaq, is being investigated by New York prosecutors about alleged irregularities in the voting on the deal.

The company has also been asked for documents about the merger by the Securities and Exchange Commission.

HP is already fighting off a lawsuit by dissident director Walter Hewlett, son of one of the company's founders.

Mr Hewlett - who has already been kicked off HP's board - says the company fiddled the figures, which have yet to be made public.

In response to the news, HP's shares slid slightly on the New York stock exchange, although by 1545 GMT they recovered to $17.90, a gain of 0.56% on the day.

While the SEC request is voluntary, the interest from the New York US Attorney's Office comes in the form of a compulsory subpoena.

'Votes for business'

It concerns the allegation that the 19 March vote was fixed, and centres on votes by big institutional shareholders Deutsche Bank and Northern Trust.

The suggestion is that the two were offered business in exchange for a "yes" vote - and threatened with having existing deals taken away if they decided otherwise.

On 10 April, the well-respected San Jose Mercury News said it had evidence that HP chief executive Carly Fiorina told the company's chief financial officer, Bob Wayman, in a voicemail that they "may have to do something extraordinary" to win over Deutsche Bank and Northern Trust's votes.

Needless to say, HP has rejected the claim.

"We never acted improperly," a spokeswoman said. "We remain optimistic that we can close the merger on our current schedule."

The company, she pointed out, had long-standing relationships with a range of institutional shareholders including Deutsche Bank, she said.

"Some of them voted for the merger, others against, some split their votes, and others changed their minds in both directions," she said.

Voting took place on 19 March, but it is taking weeks to count all the votes from the company's 900,000 shareholders who hold some 1.9bn shares.