HP offers $25 billion for Compaq

Hewlett-Packard will acquire Compaq Computer in a stock swap worth about $25 billion, the companies announced late Monday.
HP would own 64 percent of the combined company and Compaq would own 36 percent.

The deal, one of the largest in technology history, would merge two of the biggest names in computers, printers and computer servers, and would have total revenue only slightly less than IBM, the largest computer company. The companies expect the deal to close in the first half of 2002 and project the transaction would add to Hewlett-Packard's pro forma earnings per share in the first full year of combined operations

Carleton Fiorina, the chairman and chief executive of HP, will become the new company's chairman and CEO, while Compaq's Chairman and CEO Michael Capellas will become president of the new entity. Capellas and four other Compaq board members will join HP's board.

The combined company would create a more formidable competitor for Sun Microsystems and IBM in the market for corporate servers and a bigger player in the market for personal computers for rivals such as Dell Computer Corp and Gateway Inc. The merged company would have operations in 160 countries and more than 145,000 employees.
The new Hewlett-Packard will be larger than IBM on the side of the business which includes items like personal computers and printers.

Both Hewlett-Packard and Compaq have outlined strategies to focus their businesses on selling services amid falling prices and tougher competition in the sales of hardware.
Together the two firms had 19 percent of the global PC market in the second quarter of the year, enough to easily take the No. 1 spot which Dell Computer Corp, with 13.4 percent of the market, won recently from Compaq.

The combined company, would retain the HP name.