May 3, 2002 1:10 PM PDT
HP closes book on Compaq deal
After a rancorous eight-month proxy fight, a three-day trial in Delaware, countless speeches, a blizzard of regulatory filings, and a bitter boardroom squabble, Hewlett-Packard on Friday completed the largest technology merger in history by acquiring Compaq Computer.
Closure of the deal, valued at an estimated $19 billion, is a major victory for Carly Fiorina, the HP chief executive who staked her reputation on acquiring Compaq and refused to publicly consider what would happen if her plan failed.
It also marks a further move away from HP's two founding families, who opposed the acquisition and used their combined 18 percent holdings to oppose the deal. In the end, however, HP won the approval of about 51 percent of its shareholders.
The sizable remainder of shareholders agreed with former board member Walter Hewlett that combining the companies would dilute the HP lucrative printer operation while increasing its exposure to the low-margin PC business. Many employees also criticized the union, partly because some 15,000 jobs are expected to be cut from a combined work force of 150,000.
Fiorina has said that HP will always be proud of its legacy, but she has not outlined any concrete role for the family to play in the "new HP." The new company plans to officially launch at an event Tuesday in Cupertino, Calif., where it will provide some details on product plans and other integration issues.
The combined company will be the world's biggest maker of computers and printers, as well as the third-largest provider of technology services, ostensibly able to tackle IBM and Sun Microsystems, while becoming more competitive against Dell Computer.
Gone is the independent Compaq, whose semi-portable PC dreamed up in a Houston pie shop some 20 years ago was the original challenge to IBM's PC. In a largely symbolic move, HP said Thursday that it would change its ticker symbol from "HWP" to "HPQ" to reflect Compaq's heritage and contribution to the new company.
HP will try and hit the ground running, moving quickly to announce product plans, marketing strategies and other projects that have been drawn up during months of planning by an integration team, a group that now comprises some 1,200 workers.
Michael Capellas, who becomes HP's president, said Thursday that the company has about six months to announce those plans and begin executing on them. Analysts and investors are also eager to see signs of progress.
Customers and employees alike say they are just happy to move on after months of uncertainty.
"Basically, I'm glad that it's over," said Gary Griffiths, head of Fremont, Calif.-based Everdream, which offers both HP and Compaq computers in its business of selling PCs, software and services to companies on a subscription basis.