HP's Compaq Acquisition (B)


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Case Details:

Case Code : BSTA021
Case Length : 07 Pages
Period : 2000 - 2005
Organization : Hewlett-Packard (HP), Compaq
Pub Date : 2005
Teaching Note :Not Available
Countries : USA
Industry : Information Technology

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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.

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Excerpts

Family Opposition

The acquisition met with unprecedented opposition from Walter Hewlett, son of founder William Hewlett, who had placed his son on the board of directors in 1987. Hewlett announced that he, along with his sisters and the William and Flora Hewlett Foundation, would vote their (combined) 5% stake against the Compaq deal...

The Approval

As matters came to a head, the role of Institutional Shareholder Services (ISS) became paramount. ISS issued a statement in early March 2002, that it would recommend to its clients (who held more than 20% of HP's shares) to vote in favor of buying Compaq...

Integration Issues

Fiorina started the integration process by finalizing the product mix. Redundant product lines were eliminated. The new HP featured Compaq's corporate PCs, low-end servers, and its iPAQ handhelds, along with HP printers and UNIX servers...

The Road Ahead

Fiorina was confident that accelerated cost savings would come from leveraging HP's new product mix to renegotiate contracts for supplies such as memory chips and hard drives. By eliminating redundant administrative functions, she believed HP's cost savings would reach $3 billion a year by 2004...

Exhibits

Exhibit 1: HP's Plans
Exhibit 2: HP-Compaq - SWOT Analysis
Exhibit 3: HP-Compaq - Post-Merger

 

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