Hewlett-Packard Co. announced on Monday it will buy Compaq Computer Corp. for some $25 billion in stock, in a deal that would create a new computer and technology services powerhouse amid an industry-wide slump. The combined company, which would retain the HP name, would become the largest personal computer vendor in the world and have revenues of $87.4 billion, rivaling information technology leader IBM . The deal will generate cost savings of $2.5 billion by the middle of fiscal 2004 and add to Hewlett-Packard's pro forma earnings per share in the first full year after the merger, the companies projected, estimating the deal would close in the first half of 2002. Shareholders of Palo Alto-based HP would own 64 percent of the combined company and Compaq's shareholders would own 36 percent. Fiorina, HP Chairman and CEO, would be chairman and CEO of the combined company with Compaq chief CEO Michael Capellas becoming president.
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