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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Elwood P. Dowd who wrote (93776)	11/15/2001 11:50:13 PM
From: Night Writer	Read Replies (1) \| Respond to of 97611

HP eyed Compaq for years, struck deal in months SAN FRANCISCO, Nov 15 (Reuters) - Hewlett-Packard Co <HWP.N> took less than three months to strike a deal to buy Compaq Computer Corp.<CPQ.N>, but had eyed it for two years before fast-paced merger negotiations that almost broke down once, according to a regulatory filing on Thursday. HP, which announced its $24 billion all-stock offer for Compaq on September 3, had considered the company among other acquisition targets as early as 1999, the printer and computer company said in a merger document filed to the Securities and Exchange Commission. Chief Executive Carly Fiorina joined HP in July 1999, in the same week that Michael Capellas, Compaq's chief operating officer, became president and chief executive. She approached Capellas two years later in June 2001 with an offer to lease Hewlett-Packard's high-end computer operating system, HP-UX, to Compaq, the filing said. But she managed to stir interest in a bigger deal. "After several days of deliberation, Mr Capellas contacted Ms Fiorina to suggest that the synergies between the two companies were broader than HP-UX and that HP consider whether a broader strategic relationship might be a viable option," HP said in the filing. The two executives, whose merger plan has been blasted by some investors and is up in the air after members of the Hewlett and Packard founding families expressed opposition last week, sat down and talked about a deal on June 22. Months of talks ensued, with periodic meetings by both boards giving support, but Capellas and Fiorina could not agree on terms including "valuation concepts and issues, the governance and management of the combined company and strategic synergies," the filing said. On August 5, Compaq's board turned down the deal, deciding not to take discussions further on terms offered by HP. The next day HP's board authorised Fiorina to continue talks, and by August 23, Fiorina and Capellas reached an understanding. Details -- including multimillion retention programmes to keep executives -- were hammered out, and by late on September 3, the companies announced their plans, the filing said. ((Peter Henderson, San Francisco Bureau, 415 677-2578, peter.henderson@reuters.com)) REUTERS