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SACRAMENTO-The California State Teachers' Retirement System announced
today it has cast its vote to oppose the merger of Hewlett-Packard Company
with the Compaq Computer Corporation.
"It is our responsibility to ensure the strongest possible investment
portfolio for California's educators. Therefore, in carefully studying
this issue, we listened to both sides in the contest. Both were very persuasive,"
said Jack Ehnes, CalSTRS Chief Executive Officer. "However, on a
portfolio-wide basis, as a long-term investor, we do not believe the transaction
is in the best interest of the CalSTRS members and beneficiaries."
CalSTRS' concerns on the merger center on two main points.
-- The integration risk seems too great to be overcome on a transaction
this large and complex.
-- The merger would dilute HP's position in its profitable printer and
imaging unit.
CalSTRS, the nation's third largest pension fund, holds 3.3 million shares
of HP and 5.3 million shares of Compaq in its $100 billion investment
portfolio.
The pension system serves approximately 687,000 members and benefit recipients
by providing retirement, disability and survivor benefits to California's
public school educators in grades kindergarten through community college.
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