Suchit A.

HP – COMPAQ
Pratik B.
A Failed Merger? Nisha B.
Roshni B.
Vikram B.
Rishikesh D.
INTRODUCTION

 Merge champion (Fiorina)

 Initiated Sept 2001

 25$ billion all stock purchase

 Biggest merger in IT history

Carly Fiorina: Mike Capellas:
C.E.O. of Hewlett-Packard C.E.O. of Compaq
Hewlett Packard (HP)
Founded : January 1, 1939
Headquarters : Palo Alto, California, United States of America
Founders : William Hewlett & David Packard

Originated in Garage
Designed the first Personal Computer

Developing & Manufacturing

 Computing

 Data Storage

 Networking hardware

 Designing software & delivering services

COMPAQ
Founded :1982


Headquarters : Harris County, Texas, United States



Founders : , Jim Harris and Bill Murto



Introduced Deskpro 286/386 based systems



the largest supplier of PC systems during the 1990s



1997 : Tandem Acquisition



1998 : DEC Acquisition



overtaken by Dell in 2001


VALUE OF THE DEAL

Compaq was acquired for $ 25 Billion by HP in

2002
WHY MERGER?

 HP and Compaq suffer similar risks of ‘Standing still’

 Increase competition with major competitors like IBM, DELL

 Cut Costs by US$3 billion annually within 3 years & Increase

earnings for shareholders.

 Merger will enhance business segments as individual and

complimentary each other like supply chain.

 Face the challenge of a Shrinking market.

POSITIVE IMPACTS OF
MERGER?

 Improved Economics and Innovation

 Complementary Leadership in Key Markets

 Strengthened Business Provides Critical Mass in Key Growth

Market

 Financial Benefits
NEGATIVE IMPACTS OF
MERGER?

 HP’s Business Portfolio Will Be Worse

 The Integration Risk of the Proposed Merger is Substantial

 Negative Financial Impact on HP Stockholders

 HP’s Strategic Position Will Not Materially Improve

 SWOT ANALYSIS

STRENGTH
Offer new type menu not available in the market:
Fewer market competition
Cost reduction

WEAKNESSES
Integration strategy need to layoff
Cultural integration
Confronted with problems and issues
 SWOT ANALYSIS

OPPORTUNITIES
Merger could improve economics and innovation
Strengthen leadership in storage
Market growth in IT services

THREATS
Economic downturn
STATUS TODAY
CONCLUSION
THANK
YOU