Hewlett-Packard and Compaq Merger Opposed by CalSTRS

News release

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.