NewsByte 4 September 2001

Hewlett-Packard and Compaq Agree to Merge, Creating $87 Billion Global Technology Leader

Will Have #1 Worldwide Positions in Servers, PCs & Handhelds, and Imaging & Printing; Leading Positions in IT Services, Storage, Management Software. Companies Expect Annual Cost Synergies of Approximately $2.5 Billion; Transaction Expected to Be Substantially Accretive in Year One

Hewlett-Packard Company (NYSE: HWP) and Compaq Computer Corporation announced today a definitive merger agreement to create an $87 billion global technology leader. The new HP will offer the industry's most complete set of IT products and services for both businesses and consumers, with a commitment to serving customers with open systems and architectures. The combined company will have #1 world-wide revenue positions in servers, access devices (PCs & handhelds), and imaging & printing, as well as leading revenue positions in IT services, storage, and management software. The merger is expected to generate cost synergies reaching approximately $2.5 billion annually and drive a significantly improved cost structure. Based on both companies' last four reported fiscal quarters, the new HP would have approximate pro forma assets of $56.4 billion, annual revenues of $87.4 billion and annual operating earnings of $3.9 billion. It would also have operations in more than 160 countries and over 145,000 employees. Carly Fiorina, Chairman and Chief Executive Officer of HP, will be Chairman and CEO of the new HP. Michael Capellas, Chairman and Chief Executive Officer of Compaq, will be President. Capellas and four other members of Compaq's current Board of Directors will join HP's Board upon closing.