The document summarizes HP's acquisition of Compaq in 2002. It provides background on both companies and reasons for the merger, including achieving economies of scale, strengthening their business and product portfolio, and realizing estimated $2.5 billion in annual cost savings. However, there were also risks such as integration challenges and negative impact on stock prices. Five years after the merger, shareholder returns increased 46% and HP became the leader in various markets like servers and printers. The merger ultimately accomplished the goals of providing critical mass and ensuring long-term success in the transitioning industry.
10. Background – Compaq Entered Server Market HP Acquired Compaq Rod, Jim and Bill Founded COMPAQ DEC Acquisition 1982 1990 1997 1984 2002 1998 2000 Introduced Deskpro 286/386 based systems Tandem Acquisition No 1 in PC worldwide
33. Enhance the service & consultingConvincing customers: Customers want a clear “migration path,” especial with regards to discontinued offerings Cost: Cut Costs while monitoring revenues (about 3B) Internal IT: Integrating internal IT applications
35. Achieved Benefits for customers HP now offers a one-stop shopping experience for global corporate customers Broader product portfolio Ease of doing business– Enhanced supply and demand visibility The economies of scale have helped HP focus on its legacy of manufacturing innovation Direct selling capabilities Elimination of non-value-added steps, such as administration, and costs
36. Achieved Benefits for Share holders In mid-July 2007, Five years after the merger announcement, – Shareholder returns were up 46 percent. Over the same period: The Standard & Poor's IT index had sunk 9 percent Competitors like: IBM was down 23 percent Dell was up only 2 percent
38. Conclusion "The merger accomplished what HP and Compaq set out to do in the first place, providing the critical mass and reach needed to ensure a long-term role in an industry undergoing a fundamental transition,“ "This deal enabled the merged company to grow revenue and profits in an increasingly competitive marketplace.“ Jean S. Bozman, VP–Research, International Data Corporation. 8th Nov 2006 Many predicted HP+Compaq would be 1 + 1 = 1 Some predicted HP+Compaq would be 1 + 1 = 2 Very few predicted the reality HP+Compaq would be 1 + 1 = 3 A SUCCESSFUL MERGER