HP & Compaq Merger Presentation

7/27/2019 HP & Compaq Merger Presentation..

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WelcomeTo

Our

Presentation


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Presentation Topics

The Hewlett-Packard( hp) and CompaqMerger


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Presented To

Benazir RahmanLecturer

Northern University Bangladesh


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Presented ByNAME ID#

Md. Rashedur Rahman BBA 110170216

Md. Sahriar Nafiz BBA 110170193

Md. Israfil BBA 110170221

Md. Nazmul Hasan


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About Hp

Hewlett-Packard Company -- a leading global provider ofcomputing and imaging solutions and services -- is focusedon making technology and its benefits accessible toall. HP had total revenue from continuing operations of

$48.8 billion in its 2000 fiscal year

Well-respected systems vendor

Smaller, but worthy competitor to IBM

Competes mainly in the hardware business with desktopsand servers


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About CompaqCompaq Computer Corporation is a leading global provider

of enterprise technology and solutions. Compaq designs,develops, manufactures and markets hardware, software,solutions and services, including industry-leadingenterprise storage and computing solutions.

Compaq sales leveled off with added competition fromDell

Compaq was best known for its personal computer

offerings


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Merger Dates

September 4, 2001 - HP and Compaqannounced a definitive merger agreementto create an $87 billion global technology

leader.

Eights months later on May 3, 2002 HPand Compaq officially merge


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Reasons for Merger

To compete with IBM and other companies

The combined services business will have

65,000 services professionals vs. 100,000-plus for IBM

Reduce Costs

Generate cost synergies reaching $2.5billion annually improved cost structure.


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Reasons for Merger

Expected annual revenue of $87.4 billionNeck and neck with IBM in Tech company

Cross selling to both companies

customers Build better internet systems with

Compaqs Technology.

Top market share in printers, PCs, andstorage

Second-largest server business and third-

largest tech-services organization


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Transaction Summary

Structure Stock-for-stock merger

Exchange Ratio 0.6325 of an HP share perCompaq share

Current ValueApproximately $25 billion

Ownership HP shareholders 64%; Compaqshareholders 36%

Accounting Purchase

Expected Closing First half of 2002


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Benefits Of Merger

Creates an $87 billion global technology leader, with theindustry's most complete set of IT products and servicesfor both businesses and consumers.

New HP would be the #1 global player in servers,imaging & printing, and access devices (PCs & hand-helds), as well as Top 3 player in IT services, storageand management software.

The combination furthers each company's commitmentto open, market-unifying systems and architectures and

aggressive direct and channel distribution models. Combined company can create substantial shareowner

value through significant cost structure improvementsand access to new growth opportunities.


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Benefits Of Merger

Transaction expected to be substantially accretive to proforma EPS in first full year of combined operations.

The merger is expected to generate cost synergies ofapproximately $2.0 billion in fiscal 2003, the first full yearof operations; fully realized synergies are expected toreach a run rate of approximately $2.5 billion by mid-fiscal 2004.

New HP would have operations in more than 160countries and over 145,000 employees.


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Total Earnings In a Chart

Key Facts(last 4 qtrs): HP Compaq Pro FormaCombined

Total

Revenues

$47.0 billion $40.4 billion $87.4 billion

Assets $32.4 billion $23.9 billion $56.4 billion

Operating

Earnings

$2.1 billion $1.9 billion $3.9 billion


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SWOT Analysis

Strengths Compaq-Server category and overall storage

HP High End Storage

Strong Brand recognition

Weakness Developing a direct distribution model

Consulting and outsourcing

Compaq- Printers


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SWOT Analysis

OpportunitiesMerger could improve economics & Innovation

Market growth in IT Services

Threats Dell increases pressure in the low-end server market

IBM, Dell and new entrants erode more market share


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Recommendation

After paying $5.4 billion to finance amerger with Digital Equipment, Compaqeliminated overlap by cutting thousands of

jobs worldwide

The combined services business will have65,000 services professionals vs. 100,000-plus for IBM

This Merger created a strong Brand

This merger increase the growth of ITServices


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Recommendation

This Merger Improve FinancialPerformance

Generate cost synergies reaching $2.5billion annually improved cost structure.


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Thank you

Documents

HP & Compaq Merger Presentation