HP – COMPAQ

A Failed Merger?

Suchit A.

Pratik B.

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:

C.E.O. of Hewlett-Packard

Mike Capellas:

C.E.O. of Compaq

Hewlett Packard (HP)

Founded : January 1, 1939Headquarters : Palo Alto, California, United States of AmericaFounders : William Hewlett & David PackardOriginated in GarageDesigned the first Personal ComputerDeveloping & 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

STRENGTHOffer new type menu not available in the market:Fewer market competitionCost reduction

WEAKNESSESIntegration strategy need to layoffCultural integrationConfronted with problems and issues

SWOT ANALYSIS

OPPORTUNITIESMerger could improve economics and innovationStrengthen leadership in storageMarket growth in IT services

THREATSEconomic downturn

STATUS TODAY

CONCLUSION

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