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June 12, 2008 at 7:55 am by Michelle Leder

HP’s new warning on mergers…

Here at footnoted, we do a lot of reading between the lines as we read the fineprint, trying to figure out exactly what the folks who write this stuff are really trying to say, even when they’re trying very hard to be obtuse. So you can imagine our surprise upon reading this 10Q that Hewlett-Packard (HPQ) filed on Friday, which included this new disclaimer in the standard-issue “forward-looking statements”:

  • any statements regarding pending business combination transactions
  • the possibility that the expected benefits of pending combination transactions may not materialize as expected or that the transactions may not be timely completed

A quick search shows that HP actually began adding that language to its filings on May 20, about a week after announcing its $13.9 billion deal to acquire EDS for $25 a share. A broader search shows that the last time HP included that language in its filings was all the way back in 2002, around the time it was completing the deal with Compaq — a deal that has been widely criticized and which ultimately led to Carly Fiorina’s departure.

Presumably, Mark Hurd has higher hopes for the EDS deal. But just in case it doesn’t work out exactly as planned, nobody can claim they weren’t warned!

This entry was posted Thursday, June 12th, 2008 at 7:55 am written by Michelle Leder and is filed under Buried treasure, Urge to merge with the following tags: , , . You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

3 Responses to “HP’s new warning on mergers…”

  1. dafydd Says:
    June 12th, 2008 at 9:03 am

    May I just say

    “It’s ‘may not be completed in a timely fashion,’ you twits!”

    in the general direction of the HP Legal Department? Really, did ~anyone~ try reading that sentence out loud?

  2. John Says:
    June 13th, 2008 at 7:51 am

    Did you seriously just try to read a hidden message into that language? Are you completely unaware of the legal landscape?! If HP is doing a merger and includes that language in its SEC filings, it is attempting to provide meaningful cautionary language to protect itself against plaintiffs’ lawyers claiming that the stockholders were duped because they had no idea business decisions can turn out badly. If HP does NOT include language of that sort, it does not in any way reflect confidence in the transaction, it means the management team is being irresponsible!

    Keep looking in the fineprint for the “jewels”, but this one should have been expected and no surprise to anyone. Go try to find other companies doing mergers and you’ll see that they do the same thing.

  3. Michelle Leder Says:
    June 15th, 2008 at 8:35 pm

    Thanks for your perspective, John. I didn’t mean to imply that this was some sort of smoking gun. More like a curious addition, especially since HP only seems to include these statements on the so-called “big deals”. They’ve bought other companies since Compaq, but that was the last time this warning was in their filings.