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HP To Buy Compaq In $25 Billion Deal

Palo Alto, Calif. – Hewlett-Packard yesterday announced it had signed a definitive agreement to acquire Compaq Computer in a $25 billion stock swap.

The new company created by the deal will take the HP brand name, post annual revenues in the $87 billion range and have 145,000 employees based in 160 countries, the companies said in a written release. On the product side the combined HP/Compaq will instantly start vying with Dell to become the top PC seller in the U.S. and will do the same to Sun Microsystems and IBM on the computer server side market.

IDC and Gartner/Dataquest listed Compaq and HP in second and third on their top PC vendor list earlier this year.

Once the merger is completed HP will be organized around four business units: printing and imaging, led by president Vyomesh Joshi; access devices, which includes consumer PCs and handhelds led by Duane Zitzner; IT infrastructure led by Peter Blackmore -currently Compaq’s executive vice president of sales and services; and services with Ann Livermore in charge.

HP CEO Carly Fiorina will hold the CEO slot under the new table of organization, while Compaq CEO Michael Capellas and four other members of Compaq’s board of directors will take seats on HP’s board.

HP said operating efficiencies gained with the merger will hit $2.5 billion per year starting in 2003, with about $2 billion being saved in 2002. The merger is expected to close in the first half of 2002, if it passes muster with Federal regulatory agencies.