HP-Compaq - A Failed Merger?


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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:

Price:

Case Code : BSTR202 For delivery in electronic format: Rs. 400;
For delivery through courier (within India): Rs. 400 + Rs. 25 for Shipping & Handling Charges

Themes

Mergers | Acquisitions | Strategic Alliances
Case Length : 21 Pages
Period : 1999-2005
Organization : HP, Compaq
Pub Date : 2006
Teaching Note : Available
Countries : US
Industry : Information Technology and Related Services

Abstract:

The case gives an overview of the merger between two leading players in the global computer industry - Hewlett -Packard Company (HP) and Compaq Computer Corporation (Compaq). The case explores the reasons for HP's failure to realize the synergies identified prior to the merger. It highlights that the leadership, legacy and cultural issues play an important role in mergers. The case describes in detail the rationale for HP -Compaq merger, problems faced in integrating the merged entities and whether the merger made business and economic sense. It also describes the product profile of the merged entity and how the new HP compares with its major competitors, IBM and Dell Computers.

Finally, the case presents the challenges faced by the new CEO of HP, Mark Hurd, in mid -2005. The case is designed to help students critically analyze a merger deal and understand the various issues involved such as product synergies, cost savings and technological compatibility. The case also provides an insight into the possible hurdles that might crop up while implementing a mega - merger.

Issues:

» The basic objectives underlying the merger move between HP and Compaq
» The possible reasons for unsuccessful mergers
» How mergers fail to create shareholders' value
» Role of a leader in making merger successful
» The importance of cultural compatibility in making mergers successful
» The global PC industry structure

Contents:

  Page No.
A Mega-Merger 1
Background Note 2
The Rationale for the Merger 4
The Merger Integration 6
Does the Merger Make Business Sense 6
Does the Merger Make Economic Sense 8
The Challenges Ahead 10
Exhibits 13

Keywords:

HP, Compaq, Mergers and Acquisitions, Merger Integration, Analysis of a Merger, Product Integration, Cultural Mismatch, Competitive Advantage, Restructuring, HP's Corporate Organization, Dell Computers, IBM

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