Prosecutors Examine Hewlett-compaq Merger

Hewlett Packard's victory in the bitterly contested $18.7bn takeover of Compaq was further muddied yesterday when the technology firm said the deal was under investigation by US prosecutors and financial regulators.

The company has received summonses from the US attorney's office in New York and has been contacted by the San Francisco division of the securities and exchange commission.

Both are seeking further detail on the votes of two Hewlett Packard shareholders, Deutsche Bank and Northern Trust. In a lawsuit, the dissident director Walter Hewlett has claimed that the board of the firm led by chief executive Carly Fiorina effectively bought Deutsche Bank's votes at the 11th hour by naming it co-arranger of a $4bn credit line.

The official outcome of the vote that took place on March 19 has still not been released, but Hewlett Packard is claiming a narrow success.

Despite the shareholder vote taking place almost one month ago, the brutal nature of the fight has not eased. At the end of last week, a phone message left by Ms Fiorina on the answer machine of chief financial officer Bob Wayman was leaked anonymously to a San Jose newspaper.

In the message, left just days before the vote took place, Ms Fiorina said "extraordinary" action might have to be taken to persuade the two wavering shareholders to back the deal.

Hewlett Packard said it was cooperating with the SEC and the US attorney's office. The SEC inquiry, which has requested the provision of documents concerning Hewlett Packard's relationship and communications with Deutsche Bank, is still informal.

HP reiterated its claim that it had done nothing wrong. "We have long-standing relationships with Deutsche Bank as well as with many other institutional shareowners," it said. "Some of them voted for the merger, others against, some split their votes, and others changed their minds - in both directions. We never acted improperly. We remain optimistic that we can close the merger on our current schedule."

Mr Hewlett, son of co-founder Bill Hewlett, is also seeking a court order to protect Hewlett Packard employees from retribution if they come forward with information that supports his lawsuit.