Editing Compaq (section)

===Acquisition by Hewlett-Packard===
In 2002, Compaq signed a merger agreement with [[Hewlett-Packard]] for {{US$|24.2 billion}},<ref name="nytimes2001"/> including {{US$|14.45 billion}} for [[Goodwill (accounting)|goodwill]], where each Compaq share would be exchanged for 0.6325 of a Hewlett-Packard share. There would be a termination fee of {{US$|675 million}} that either company would have to pay the other to break the merger.<ref name="awpagesociety1">{{cite web |url = http://www.awpagesociety.com/images/uploads/HP-Compaq-case.pdf |title = The Hewlett-Packard and Compaq Merger |access-date = 2012-11-16 |url-status = dead |archive-url = https://web.archive.org/web/20120913111505/http://www.awpagesociety.com/images/uploads/HP-Compaq-case.pdf |archive-date = 2012-09-13 }}</ref> Compaq shareholders would own 36% of the combined company while HP's would have 64%.<ref name="awpagesociety1"/> Hewlett-Packard had reported yearly revenues of {{US$|long=no|47 billion}}, while Compaq's was {{US$|long=no|40 billion}}, and the combined company would have been close to [[IBM]]'s {{US$|long=no|90 billion}} revenues. It was projected to have {{US$|long=no|2.5 billion}} in annual cost savings by mid-2004. The expected layoffs at Compaq and HP, 8500 and 9000 jobs respectively, would leave the combined company with a workforce of 145,000.<ref name="nytimes2001"/> The companies would dole out a combined {{US$|long=no|634.5 million}} in bonuses to prevent key employees from leaving if shareholders approve the proposed merger, with {{US$|long=no|370.1 million}} for HP employees and {{US$|long=no|264.4 million}} for Compaq employees.<ref>{{cite web|url=https://www.crn.com/news/channel-programs/18818870/on-the-money-trail.htm|title=On the Money Trail|date=17 January 2002}}</ref><ref>{{cite news|url=https://www.sfgate.com/business/article/Officers-named-for-post-merger-HP-Analysts-2868545.php|title=Officers named for post-merger HP / Analysts still skeptical about pending deal|newspaper=Sfgate |date=16 October 2001 |last1=Pimentel |first1=Benjamin }}</ref>

Both companies had to seek approval from their shareholders through separate special meetings.<ref>{{cite web|url=https://www.cnet.com/news/compaq-preps-for-life-after-hp-1/|title = Compaq preps for life after HP}}</ref> While Compaq shareholders unanimously approved the deal, there was a public proxy battle within HP as the deal was strongly opposed by numerous large HP shareholders, including the sons of the company founders, Walter Hewlett and David W. Packard, as well as the California Public Employees’ Retirement System ([[CalPERS]]) and the [[Ontario Teachers' Pension Plan]].<ref>{{cite web |author = Crn |url = http://www.crn.com/it-channel/18817715;jsessionid=D1MDU4QZ5SOHBQE1GHPCKHWATMY32JVN |archive-url = https://archive.today/20130120033658/http://www.crn.com/it-channel/18817715;jsessionid=D1MDU4QZ5SOHBQE1GHPCKHWATMY32JVN |url-status = dead |archive-date = 2013-01-20 |title = Walter Hewlett Files Proxy Against Compaq Merger |publisher = Crn.com |date = 2001-12-27 |access-date = 2012-08-26 }}</ref><ref>{{cite web |url = http://knowledge.wharton.upenn.edu/article.cfm?articleid=527 |title = Showdown in Silicon Valley: Will Fiorina or Hewlett Win the Battle for H-P Shareholders' Votes? – Knowledge@Wharton |publisher = Knowledge.wharton.upenn.edu |access-date = 2012-08-26 }}</ref> Walter Hewlett only reluctantly approved the merger, in his duty as a member of the board of directors, since the merger agreement "called for unanimous board approval in order to ensure the best possible shareholder reception".<ref name="awpagesociety1"/> While supporters of the merger argued that there would be economies of scale and that the sales of PCs would drive sales of printers and cameras, Walter Hewlett was convinced that PCs were a low-margin but risky business that would not contribute and would likely dilute the old HP's traditionally profitable Imaging and Printing division.<ref name="theinquirer1"/><ref>{{cite web |url = http://www.cata.ca/files/PDF/Resource_Centres/hightech/reports/studies/quebec-HPQ-merger.pdf |title = The HP-Compaq Merger |publisher = Cata.ca |access-date = 2012-11-16 |url-status = dead |archive-url = https://web.archive.org/web/20120917070518/http://www.cata.ca/files/PDF/Resource_Centres/hightech/reports/studies/quebec-HPQ-merger.pdf |archive-date = 2012-09-17 }}</ref> David W. Packard in his opposition to the deal "[cited] massive layoffs as an example of this departure from HP’s core values...[arguing] that although the founders never guaranteed job security, 'Bill and Dave never developed a premeditated business strategy that treated HP employees as expendable.'" Packard further stated that "[[Carly_Fiorina|[Carly] Fiorina]]’s high-handed management and her efforts to reinvent the company ran counter to the company’s core values as established by the founders". The founders' families who controlled a significant amount of HP shares were further irked because Fiorina had made no attempt to reach out to them and consult about the merger, instead they received the same standard roadshow presentation as other investors.<ref name="awpagesociety1"/>

Analysts on Wall Street were generally critical of the merger, as both companies had been struggling before the announcement, and the stock prices of both companies dropped in the months after the merger agreement was made public. Particularly rival Dell made gains from defecting HP and Compaq customers who were wary of the merger.<ref>{{cite news |author = <!--Start Byline--><!--End Byline--> |url = https://money.cnn.com/2001/10/23/technology/earns_compaq/ |title = Compaq logs 3Q loss, lowers 4Q target – Oct. 23, 2001 |publisher = Money.cnn.com |date = 2001-10-23 |access-date = 2012-11-16 }}</ref> Carly Fiorina, initially seen as HP's savior when she was hired as CEO back in 1999, had seen the company's stock price drop to less than half since she assumed the position, and her job was said to be on shaky ground before the merger announcement.<ref name="awpagesociety1"/> HP's offer was regarded by analysts to be overvaluing Compaq, due to Compaq's shaky financial performance in the past recent years (there were rumours that it could run out of money in 12 months and be forced to cease business operations had it stayed independent), as well as Compaq's own more conservative valuation of its assets.<ref name="theinquirer1"/><ref name="nytimes2001"/><ref>{{cite web |url = https://www.scribd.com/doc/37037239/Hp-Compaq-A-Failed-Merger |title = Hp Compaq-A Failed Merger |publisher = Scribd.com |access-date = 2012-11-16 }}</ref> Detractors of the deal noted that buying Compaq was a "distraction" that would not directly help HP take on IBM's breadth or Dell Computer's direct sales model. Plus there were significant cultural differences between HP and Compaq; which made decisions by consensus and rapid autocratic styles, respectively. One of Compaq's few bright spots was its services business, which was outperforming HP's own services division.<ref name="CNET">{{cite web |url = https://www.cnet.com/news/hp-compaq-merger-worth-the-wait/|title = HP-Compaq merger: Worth the wait?|publisher = CNET |date =2002-09-03|access-date = 2020-06-11 }}</ref>

The merger was approved by HP shareholders only after the narrowest of margins,{{Clarify|date=May 2012}} and allegations of vote buying (primarily involving an alleged last-second back-room deal with [[Deutsche Bank]]) haunted the new company. It was subsequently disclosed that HP had retained Deutsche Bank's investment banking division in January 2002 to assist in the merger. HP had agreed to pay Deutsche Bank {{US$|long=no|1 million}} guaranteed, and another {{US$|long=no|1 million}} contingent upon approval of the merger. On August 19, 2003, the [[U.S. Securities and Exchange Commission|U.S. SEC]] charged Deutsche Bank with failing to disclose a material conflict of interest in its voting of client proxies for the merger and imposed a civil penalty of {{US$|long=no|750000}}. Deutsche Bank consented without admitting or denying the findings.<ref>[https://www.sec.gov/news/press/2003-100.htm SEC Press Release:] "SEC Brings Settled Enforcement Action Against Deutsche Bank Investment Advisory Unit in Connection with Its Voting of Client Proxies for Merger Transaction; Imposes {{US$|long=no|750000}} Penalty"</ref>

Hewlett-Packard announced the completion of merger on May 3, 2002,<ref>{{cite web|url=http://www.hp.com/hpinfo/newsroom/press/03may02a.htm|title=HP Closes Compaq Merger|publisher=[[Hewlett-Packard]]|date=2002-05-03|access-date=2023-04-20|archive-date=2002-06-04|archive-url=https://web.archive.org/web/20020604190230/http://www.hp.com/hpinfo/newsroom/press/03may02a.htm|url-status=bot: unknown}}</ref> and the merged HP-Compaq company was officially launched on May 7.<ref>{{cite web|url=http://www.hp.com/hpinfo/newsroom/press/07may02a.htm|title=The New HP is Ready|publisher=[[Hewlett-Packard]]|date=2002-05-07|access-date=2023-04-20|archive-date=2002-06-01|archive-url=https://web.archive.org/web/20020601145231/http://www.hp.com/hpinfo/newsroom/press/07may02a.htm|url-status=bot: unknown}}</ref> Compaq's pre-merger [[ticker symbol]] was CPQ. This was combined with Hewlett-Packard's ticker symbol (HWP) to create the current ticker symbol (HPQ), which was announced on May 6.<ref>{{cite web|url=http://www.hp.com/hpinfo/newsroom/press/06may02c.htm|title=HP Rings in New Company and New Stock Symbol at NYSE Ceremony|publisher=[[Hewlett-Packard]]|date=2002-05-06|access-date=2023-04-20|archive-date=2002-06-04|archive-url=https://web.archive.org/web/20020604190448/http://www.hp.com/hpinfo/newsroom/press/06may02c.htm|url-status=bot: unknown}}</ref>