Hewlett-Packard to buy Compaq-WSJ
$26 billion deal creates world's biggest PC maker
By Allen Wan, CBS.MarketWatch.com
Last Update: 10:42 PM ET Sept. 3, 2001
NEW YORK (CBS.MW) - Hewlett-Packard has agreed to acquire its larger rival Compaq Computer in an all-stock deal worth about $26 billion, creating the world's biggest computer company, the Wall Street Journal reported in its online edition, citing people familiar with the matter.
The boards of both computer giants have approved the deal and an announcement is expected Tuesday.
Compaq (CPQ: news, chart, profile) is the world's second biggest maker of personal computers, while H-P (HWP: news, chart, profile) is the third biggest. Dell Computer (DELL: news, chart, profile) is the industry leader.
Under the terms of the deal, H-P will swap about 0.63 of its shares for each share of Compaq. Compaq shareholders will only get a modest premium of about 19 percent for their stock.
Both companies have been hit hard by the downturn in the PC industry. Their share prices plunged to 52-week lows last Friday. Shares of Compaq ended down 34 cents at $12.35 on Friday, while those of H-P fell 19 cents to $23.21.
Both companies declined to comment on the report.
H-P Chief Executive Carly Fiorina will be the CEO of the combined company, while Compaq chief Michael D. Capellas will serve as president, the report said.
The two companies expect $2.5 billion in annual cost savings within a few years, it said.
The deal creates the world's largest supplier of PCs and server computers, with a 19 percent share of the global PC business. Dell is currently the global PC leader with a 13 percent market share.
The new company will also hold more than 37 percent of the market for powerful server computers.
Allen Wan is a news editor for CBS.MarketWatch.com in New York. |
