Judge rules Hewlett-Packard, Compaq deal can continue

? A Delaware judge on Tuesday cleared Hewlett-Packard Co. of allegations it acted improperly in the proxy fight over the acquisition of Compaq Computer Corp., likely paving the way for completion of the high-tech industry’s biggest merger.

Judge William B. Chandler ruled that former H-P director Walter Hewlett failed to support his charges that H-P bullied a big investor into supporting the $18.4 billion deal.

“The evidence demonstrates that H-P’s statements concerning the merger were true, complete and made in good faith,” wrote the Chancery Court judge, who presided over the three-day trial last week in Wilmington, Del.

Hewlett can challenge the ruling in Delaware Supreme Court. The H-P heir said he was disappointed with the decision but planned to review it closely before deciding on his next step.

Hewlett said he would maintain his involvement with the company.

Palo Alto, Calif.-based H-P and Houston-based Compaq have said they plan to begin working together Tuesday.

Chandler’s ruling concluded another chapter in Hewlett’s fight to stop the acquisition.

After H-P narrowly won its shareholder vote on the Compaq acquisition, Hewlett tried to block the deal by suing the computing giant, which his father, William Hewlett, co-founded in 1939. He sued in Delaware because H-P is incorporated there.

That step so angered H-P management and its other directors that Hewlett was not renominated for another term on the board, leaving the Silicon Valley institution without a Hewlett or Packard in its boardroom for the first time.

A preliminary tally released two weeks ago found that H-P won the shareholder vote 51.4 percent to 48.6 percent. That amounted to a lead of 45 million shares. The tally is not yet official because both sides are challenging individual ballots.