Hewlett-Packard cleared by US judge

A US judge has cleared Hewlett-Packard of allegations that the company acted improperly over the Compaq Computer Corporation acquisition, probably paving the way for the completion of the high-tech industry’s biggest merger.

After a three-day trial last week in Wilmington, Delaware, Chancery Court Judge William Chandler ruled that former HP director Walter Hewlett failed to support his claims that HP bullied a big investor into supporting the Compaq deal and lied to investors about the progress of the merger plans.

Mr Hewlett said he would not appeal the ruling.

‘‘I will therefore now do everything possible to support the successful implementation of HP’s acquisition of Compaq and encourage others who have shared my views in the past several months to do the same,’’ the HP heir said in a statement last night.

HP and Compaq have said they plan to begin working together on May 7.

Judge Chandler’s judgment concluded another contentious chapter in Hewlett’s fight to stop what would be the biggest high-tech merger in history.

After HP narrowly won its shareholder vote on the Compaq acquisition, Hewlett tried again to block the deal by suing the computing giant, which his father, William Hewlett, co-founded in 1939.

That step so angered HP management and its other directors that Hewlett was not renominated for another term on the board, leaving the company without a Hewlett or Packard for the first time.

A preliminary tally released two weeks ago found that HP won the shareholder vote 51.4% to 48.6%.

That amounted to a lead of 45 million shares - more than the 17 million to 24 million believed to have been cast by Deutsche Bank.

The tally is not yet official because both sides are challenging individual ballots, a process known as ‘‘the snake pit’’.

The trial in Delaware featured 10 hours of testimony from HP’s top two executives, CEO Carly Fiorina and chief financial officer Robert Wayman.

Hewlett claimed that HP threatened to withhold future investment banking business from Deutsche Bank unless the investment firm cancelled its vote against the deal and voted for it at the last minute.

In a voice mail for Wayman two nights before the March 19 shareholder vote, Fiorina suggested they do something ‘‘extraordinary’’ for Deutsche Bank.

Then in a conference call with Deutsche money managers about an hour before the shareholder vote began, Fiorina said their decision was ‘‘of great importance to our ongoing relationship’’.

Hewlett lawyers also said HP’s proxy solicitor had noted on a planning chart that HP had a ‘‘carrot of future business’’ to use in lobbying Deutsche Bank.

Deutsche Bank was performing a variety of multi-million dollar services for HP.

Fiorina and Wayman said they asked Deutsche money managers to support the deal on its merits and did not resort to coercive tactics.

The judge agreed, saying: ‘‘The plaintiffs can point to nothing in those exchanges that indicates a threat from management that future business would be withheld by HP from Deutsche Bank.’’