Merger of hp and compaq
Download
1 / 13

Merger of HP and Compaq - PowerPoint PPT Presentation


  • 199 Views
  • Updated On :

Merger of HP and Compaq. HP. Found in 1939 by William R. Hewlett and David Packard Carly Fiorina, joined HP in July 1999, is chairman and CEO of HP. Global provider of computing and imaging solutions and services to consumers and business. . HP's four core business groups.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Merger of HP and Compaq' - thanh


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

Slide2 l.jpg
HP

  • Found in 1939 by William R. Hewlett and David Packard

  • Carly Fiorina, joined HP in July 1999, is chairman and CEO of HP.

  • Global provider of computing and imaging solutions and services to consumers and business.


Hp s four core business groups l.jpg
HP's four core business groups

  • Enterprise systems group,

  • Emaging and printing group,

  • HP services

  • Personal systems group


Compaq l.jpg
Compaq

  • Founded by Rod Canion, Bill Murto and Jim Harris

  • Michael Capellas is the CEO since 1999

  • manufacture of servers, workstations, networking products, desktop PCs, and portable PCs


Timeline of the hp and compaq merger l.jpg
Timeline of the HP and Compaq merger

  • 2001/06/22 Carly Fiotina visits Michael Capellas for licensing HP software issue, but wound up a merger talking.

  • 2001/09/03 Hewlett-Packard announces it will buy Compaq Computer in a deal worth $25 billion.

  • 2001/11/07 The Compaq Board of Directors meets and reaffirms its strong support for the proposed merger.

  • 2002/01/17 Compaq shareowners vote on the merger proposal.

  • 2002/03/05 The proposed merger gets a positive recommendation from Institutional Shareholder Services report.

  • 2002/03/19 HP shareholders vote on the merger; HP declares victory in Compaq merger base on preliminary vote.

  • 2002/03/28 Walter Hewlett files a lawsuit asking the Delaware Chancery Court to overturn the vote by HP shareholders to approve the deal.

  • 2002/04/30 Walter Hewlett abandons his opposition after a Delaware judge rules that Hewlett-Packard's shareholder vote was legal

  • 2002/05/01 HP announces final results of vote count; 838,401,376 HP shares were voted in favor of the deal, compared with 793,094,105 shares voted against the proposal.

  • 2002/05/03 HP completed merger by acquiring Compaq Computer, valued at an estimated $19 billion.


Reasons for merger l.jpg
Reasons for Merger

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

  • Expected annual revenue of $87.4 billion Neck and neck with IBM in Tech company

  • Cross selling to both companies’ customers

  • Build better internet systems with Compaq’s Technology.


Reasons for merger7 l.jpg
Reasons for Merger

  • Top market share in printers, PCs, and storage

  • Second-largest server business and third-largest tech-services organization


Hypothesis l.jpg
Hypothesis

  • There should be a large and positive abnormal return on the announcement date of the HP and Compaq merger.


Measurement of cumulative abnormal returns l.jpg
Measurement of Cumulative Abnormal Returns

  • Mean Adjusted Return Method

  • Market Adjusted Return Method


Mean adjusted return method l.jpg
Mean Adjusted Return Method

  • Decide event period

  • Calculate daily stock return in event day

  • Calculate 200 day average stock return from the “clean” window

  • Find residual

  • Find cumulative abnormal return (CAR)


Market adjusted return method l.jpg
Market Adjusted Return Method

  • Predicted return is the daily stock price return of S&P500 in the event period

  • Find Residual

  • Find CAR


Absolute gain and loss l.jpg
Absolute Gain and Loss

  • Absolute loss for Compaq on day +1 is $24.48 million and on day +40 is -26.85 million.

  • HP on day +1 is -$38.93 million and on day +40 is -$33.68 million.


Result and conclusion l.jpg
Result and Conclusion

  • It is a bad news.

  • Compaq CAR decreases to -13.50%.

  • HP CAR decreases to -20.54%.

  • Successful merger need a right synergy created

  • Horizontal merger make them big, not rich.

  • “Overestimate likely cost savings and synergies, setting themselves up for poor performance and shareholder disappointments in the future.”