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HP Compaq merger.

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  • Essay length: 2060 words
  • Submitted: 19/06/2006
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University Degree Finance

The first 200 words of this essay...

Financial Management By: Catherine Syder

HP Compaq merger Course: MA International Finance

In September 2001, two leading companies in the computing industry announced that they were going to merge. As one of the biggest deals in the computer industry, Hewlett-Packard Company was going to purchase Compaq Computer Corporation for $25 billion. There were several reasons mentioned for the merger. The main reason was that the size of the new merged business would enable the company to purchase stock in large quantities and take advantage of the discounts offered. (This was mentioned in a report in BusinessWeek.) The newly appointed CEO, Fiorina had mentioned that the combined amount spent on supplies of the two companies was about $65 billion and the discount that could be achieved by buying in bulk would be about 3 or 4%.

However, Fiorina's cost cutting techniques did not just consist of the savings on supplies and affected the employees. She decided on postponing pay rises for three months and less than a month after some staff had already agreed to take wage cuts, management announced that they were going to make 6,000 members of staff redundant. A memo was sent round

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