Merger creates $87 billion giant

Hewlett-Packard and Compaq Computer Corporation have announced a definitive merger agreement to create an $87 billion global technology leader.

Under the terms of the agreement, unanimously approved by both Boards of Directors, Compaq shareowners will receive 0.6325 of a newly issued HP share for each share of Compaq, giving the merger a current value of approximately $25 billion.

HP shareowners will own approximately 64% and Compaq shareowners 36% of the merged company.

The merger is expected to generate cost synergies reaching approximately $2.5 billion annually.

Subject to regulatory and shareowner approvals and customary closing conditions, the transaction is expected to close in the first half of 2002.

According to a statement, the combined company will have leading worldwide revenue positions in servers, access devices (PCs & hand-helds), and imaging & printing, as well as leading revenue positions in IT services, storage, and management software.

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