HP, Compaq Beginning to Merge Assets, Liabilities

 
 
By eweek  |  Posted 2002-05-06 Email Print this article Print
 
 
 
 
 
 
 

With all the drama and intrigue of the bitter six-month proxy battle behind them, Hewlett-Packard Co. executives are finally ready to roll out a new and much bigger company that includes all the assets and liabilities of Compaq Computer Corp.

With all the drama and intrigue of the bitter six-month proxy battle behind them, Hewlett-Packard Co. executives are finally ready to roll out a new and much bigger company that includes all the assets and liabilities of Compaq Computer Corp.

The Palo Alto, Calif., company late last week completed its long-disputed, roughly $19 billion buyout of Houston-based Compaq after winning a court battle and gaining the official tally from the March 19 shareholder vote.

This week, HP executives will release product road maps for the next three years to the companys top 100 corporate customers, outlining which products will live and die under what the company calls "the new HP," and plan to deliver the information to all enterprise customers within 30 days, said an HP spokeswoman.

The Web sites of both companies will be merged as of this week, and as of Monday, HP will start trading shares on the New York Stock Exchange under a new trading symbol, HPQ. Its old symbol was HWP. The company expects that trading of Compaq stock will be suspended before the market opens on Monday.

All of that comes as welcome news to HP and Compaq customers who have been waiting for the battle to play out to find out what will happen to their products. And although HPs struggle with family heir Walter Hewlett was a very public and contentious one, several customers said it will have little impact on their decisions whether to stay with the combined company or go elsewhere.

"Those things wouldnt affect me one way or another," said Dave Howell, manager of IS at PED Manufacturing Ltd., in Oregon City, Ore. "It all comes down to price and service. Otherwise, I see no reason not to buy from them."

The acquisition, first announced in September, was finally allowed to proceed last week after Delaware Chancery Court Judge William Chandler dismissed Hewletts lawsuit alleging HP misled and pressured shareholders to support the deal in a March 19 vote.

"The evidence demonstrates that HPs statements concerning the merger were true, complete and made in good faith," Chandler said in his 44-page ruling.

Hewlett, whose fight ultimately cost him his seat on the companys board, conceded defeat shortly after the ruling in the court case.

The day after the ruling, IVS Associates Inc., of Newark, Del., officially declared that HP shareholders had approved the deal by a margin of 51.4 to 48.6 percent, with 1.63 billion shares cast.

While two federal agencies, the U.S. Attorneys Office for the Southern District of New York and the Securities and Exchange Commission, still have ongoing inquiries into HPs proxy fight, legal experts said its likely theyll reach the same conclusion as the Delaware judge and take no action against the company.

Having succeeded in pulling off one of the most costly deals in industry history, HP Chairman and CEO Carly Fiorina now must make good on her vow to have the merged company "hit the ground running on Day One," the kind of quick decision-making that will help ease customers and business partners concerns following months of uncertainty.

"The key to success for the new organization will be clear communications, first to the employees of the joint company and also to their channel partners, who will be assigned to the various functional areas, sales and channels organizations," said John Sheaffer, CEO of the Sysix Cos., a technology solutions provider in Westmont, Ill., that resells HP products.

HP made much of its product plans clear in discussing the buyout, basically keeping the strongest brands in each companys inventory.

Of the largest product lines, HP is expected to keep its Unix-based servers and its market-leading imaging and printing business, as well as its consumer PC line.

Compaq products expected to survive are the high-end Himalaya NonStop servers, used by many of the worlds largest stock markets; its Intel-based ProLiant servers, currently the top-selling worldwide; and its commercial PC business.

While Compaq customers will undoubtedly be most impacted by the deal, which essentially marks the demise of their vendor, several expressed confidence that their computing needs will continue to be met, giving little weight to criticisms aired during the months-long debate about the deal.

"I cant say the battle has been terribly important to me," said David Brinker, CIO for CSE Insurance Group, in Walnut Creek, Calif., which relies heavily on Compaq equipment. "I think in the long run the merger will create a better company."

The emergence of the "new HP" is also noteworthy in that for the first time in the companys 63-year history, no member of the Hewlett or Packard families will be on its board following Walter Hewletts ouster April 26.

While conceding defeat, Hewlett, who had been on the board since 1987, vowed to remain a force in the companys future.

"My involvement with HP will not end today," he said last week. "I will continue to monitor the companys performance to ensure that it acts in the best interests of all stockholders."

 
 
 
 
 
 
 
 
 
 
 

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