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Hewlett-Packard’s management improperly enticed a large investor to switch sides and support HP’s $19 billion merger with Compaq Computer Corp., a lawsuit filed Thursday by a Hewlett family member alleges. The move “tainted more than enough votes to swing the election in favor of the merger,” said the lawsuit, filed by Walter Hewlett, the son of one of the company’s late founders. He led the bitterly fought five-month campaign against the combination, which pitted company heirs against current HP management. After the shareholder vote last week, HP said it had won approval by a slim margin for the biggest merger ever in the computer industry. Although final results won’t be known for weeks, the margin of victory is thought to be less than 1 percent, the lawsuit said. The lawsuit said a division of Deutsche Bank originally decided to vote the more than 25 million shares that it controlled against the merger. But the lawsuit, filed in Delaware Chancery Court in Wilmington, Del., said the bank changed course at the last minute because it was worried about losing out on future business with HP. It said the bank switched as many as 17 million votes in favor of the combination. As of Dec. 31, Deutsche Asset Management was the 11th-largest HP institutional shareholder, and its block represented 1.31 percent of the company’s shares, according to a report filed with Securities and Exchange Commission. HP induced Deutsche Bank to switch sides by adding the bank as a co-arranger on a multibillion-dollar line of credit in the days before the vote, the lawsuit said. “Deutsche Bank was led to understand that if it did not switch its votes in favor of the proposed merger, its future business dealings with HP would be jeopardized,” the lawsuit said. In a statement, HP said the lawsuit was without merit. “We find it regrettable that Mr. Hewlett has chosen to resort to baseless claims without regard to the impact of his false accusations on HP’s business reputation and employees,” the statement said. Officials with Deutsche Asset Management did not immediately return a telephone message Thursday seeking comment. Those on both sides of the deal had worked hard behind the scenes to make sure large investors’ votes were nailed down or to persuade some HP shareholders to change their minds. It will take several weeks to determine the official result of what appeared to be the closest corporate election in years. Independent proxy counters must verify each vote, and each side can challenge whether the proper people signed certain ballots. In his lawsuit, Hewlett asked for expedited court proceedings “so that these very important issues can be resolved as soon as possible.” Copyright 2002 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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