Hp / Compaq Merger
Hewlett-Packard | HP – Compaq merger | M&A, Finance and Investments, MSc. | 29th November, 2012 | | |
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Authors:
Marjan van Lieshout 348050
Bram Piederiet 322688
Jamie Romeo 319954
Patrice Temming 351185
Authors:
Marjan van Lieshout 348050
Bram Piederiet 322688
Jamie Romeo 319954
Patrice Temming 351185
1. Executive summary
In the spring of 2002, Hewlett-Packard Co (‘HP’ from here on) obtained all of the outstanding common shares of Compaq Computer Corp (‘CC’ from here on). The two parties, both involved in the High Technology industry, merged their companies through an exchanges of shares which was valued at 25.263 billion USD. HP bid .6325 of its common shares for each of the shares of CC. On the announcement day, the closing price of HP common stock was $23.21. Hence, the share price paid by the acquirer was $14.68 per common share of CC. This domestic merger was friendly in nature and supposed to realize a cost benefit of 2.5 billion per annum. Ownership of the combined company was said to be 64% of HP shareholders and 36% of Compaq shareholders. The merger was expected to be closed in the first half of 2002. Both the stock price of the acquirer and the target fell the day after the announcement, by -18.7% and -10.7%, respectively.
Almost a full decade and a CEO later, the deal turned out to be one of the greatest ever done in the technology industry.
2. Motives and Drivers of the deal
The potential motives and drivers behind this deal can be easily divided based upon the concerned stakeholders. This merger is characterized by a sharp contrast between the CEO of HP, Fiorina, on one side, and the shareholders of HP and Compaq on the other. Because Fiorina was basically the only proponent of the merger, she met with a lot of scepticism by the stakeholders, especially shareholders, of both the acquirer and target.
Before elaborating on the possible motives of Fiorina for performing this merger, we can’t ignore
|
Authors:
Marjan van Lieshout 348050
Bram Piederiet 322688
Jamie Romeo 319954
Patrice Temming 351185
Authors:
Marjan van Lieshout 348050
Bram Piederiet 322688
Jamie Romeo 319954
Patrice Temming 351185
1. Executive summary
In the spring of 2002, Hewlett-Packard Co (‘HP’ from here on) obtained all of the outstanding common shares of Compaq Computer Corp (‘CC’ from here on). The two parties, both involved in the High Technology industry, merged their companies through an exchanges of shares which was valued at 25.263 billion USD. HP bid .6325 of its common shares for each of the shares of CC. On the announcement day, the closing price of HP common stock was $23.21. Hence, the share price paid by the acquirer was $14.68 per common share of CC. This domestic merger was friendly in nature and supposed to realize a cost benefit of 2.5 billion per annum. Ownership of the combined company was said to be 64% of HP shareholders and 36% of Compaq shareholders. The merger was expected to be closed in the first half of 2002. Both the stock price of the acquirer and the target fell the day after the announcement, by -18.7% and -10.7%, respectively.
Almost a full decade and a CEO later, the deal turned out to be one of the greatest ever done in the technology industry.
2. Motives and Drivers of the deal
The potential motives and drivers behind this deal can be easily divided based upon the concerned stakeholders. This merger is characterized by a sharp contrast between the CEO of HP, Fiorina, on one side, and the shareholders of HP and Compaq on the other. Because Fiorina was basically the only proponent of the merger, she met with a lot of scepticism by the stakeholders, especially shareholders, of both the acquirer and target.
Before elaborating on the possible motives of Fiorina for performing this merger, we can’t ignore