EU Approves HP-Compaq Merger

By Jeffrey Burt  |  Posted 2002-01-31

European regulators on Thursday approved the controversial merger of Hewlett-Packard Co. and Compaq Computer Corp.

The European Commission, which is the European Unions answer to the U.S. Federal Trade Commission, approved the $25 billion merger after a formal monthlong review and without asking any concessions of the two high-tech giants.

"Todays announcement confirms that the deal does not raise competition concerns in Europe, and we see it as an encouraging step in the continuing process of satisfying regulators worldwide that this deal will provide a real stimulus for competition in the information technology markets," HP Chairman and CEO Carly Fiorina said in a prepared statement.

The approval allows HP and Compaq to focus even more of their attention on their respective shareholder votes in March, which promise to be even more difficult than the European regulatory review. The proposed merger has yet to undergo U.S. regulatory review.

The deal, announced Sept. 3, has been harshly criticized by the heirs of HP founders William Hewlett and David Packard. Together, the two families control about 17 percent of the companys stock.

The heirs contend the merger would hurt HP, forcing it to concentrate on the job of integrating the two massive companies and take attention away from developing new technologies. They also worry that it would expose the company too much to the struggling PC market at the expense of its profitable printing business.

Fiorina and Compaq Chairman and CEO Michael Capellas contend that the merged company would be big enough to compete with the IBMs of the world.

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