Hewlett-Packard has announced that it will buy Compaq in a $25
billion (£17.2 billion) share swap deal. The new group will have
the second largest overall share of the IT market with revenues of
$87.4 billion (£60.1 billion), only slightly behind IBM. However,
investigations are anticipated from competition authorities.
Under the terms of the deal, one of the largest in the
technology sector, HP shareholders will own 64% of the combined
company and Compaq’s shareholders holding the remaining shares. If
the deal succeeds, the combined entity should lead the global
market in areas such as Unix servers, imaging and printing and will
challenge Dell’s position as the world’s largest PC maker.
The deal is expected to generate cost savings of $2.5 billion by
fiscal 2004, according to news agency Reuters.
The new entity will be based at HP’s headquarters in Palo Alto,
California, but a “significant presence” will remain in Houston
where Compaq is currently based. The combined group will operate in
over 160 countries world wide, with over 145,000 employees,
although layoffs are expected.
