HP and Compaq Merge

On Sept. 3, 2001 HP and Compaq Computer Corporation announced a definitive agreement to merge, creating a new $87 billion global company (based on both companies' last four reported quarters). The combined entity, which will retain the HP name, will offer the industry's most complete set of products and services and will carry forward both companies' commitment to open systems and architectures. HP Chairman and CEO Carly Fiorina, who will be chairman and CEO of the combined company, described the merger as a "decisive move that positions us to win by offering even more value to our customers and partners." Michael Capellas, chairman and CEO of Compaq, who will be president of the new HP, commented, "We are creating a new kind of industry leader - one founded on customer success, world-class engineering, and best of breed products and services."

With operations in more than 160 countries, the new company will rank No. 1 worldwide in revenue for servers, access devices (PCs and hand-held devices), and imaging and printing. It will have a leading position in the global marketplace for information technology services, storage and management software.

The merger, valued at approximately $25 billion currently, is also expected to create substantial shareholder value through significant cost structure synergies. These anticipated synergies, projected to reach $2.5 billion annually, will come from product rationalization; efficiencies in administration, procurement, manufacturing and marketing; and savings from improved direct distribution of PCs and servers.

The structure of the new company will comprise four operating units that build on the companies' similar go-to-market and product development structures. These units are IT Infrastructure, Services, Access Devices, and Imaging and Printing.

Subject to obtaining regulatory approval and other customary closing conditions, the companies expect the merger to close in the first half of next year.

SOURCE Hewlett-Packard

Computers | FromtheWire | HP | Compaq

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