HP-Compaq - A Failed Merger?


HP-Compaq - A Failed Merger?
Case Code: BSTR202
Case Length: 21 Pages
Period: 1999-2005
Pub Date: 2006
Teaching Note: Available
 Price: Rs.400
Organization: HP, Compaq
Industry: Information Technology , Related Services
Countries: US
Themes: Mergers, Acquisitions, Strategic Alliances
HP-Compaq - A Failed Merger?
Abstract Case Intro 1 Case Intro 2 Excerpts

Abstract

The case gives an overview of the merger between two leading players in the global computer industry - Hewlett -Packard Company (HP) and Compaq Computer Corporation (Compaq). The case explores the reasons for HP's failure to realize the synergies identified prior to the merger. It highlights that the leadership, legacy and cultural issues play an important role in mergers. The case describes in detail the rationale for HP -Compaq merger, problems faced in integrating the merged entities and whether the merger made business and economic sense. It also describes the product profile of the merged entity and how the new HP compares with its major competitors, IBM and Dell Computers.

Finally, the case presents the challenges faced by the new CEO of HP, Mark Hurd, in mid -2005. The case is designed to help students critically analyze a merger deal and understand the various issues involved such as product synergies, cost savings and technological compatibility. The case also provides an insight into the possible hurdles that might crop up while implementing a mega - merger.

Issues

The case is structured to achieve the following teaching objectives

  • The basic objectives underlying the merger move between HP and Compaq
  • The possible reasons for unsuccessful mergers
  • How mergers fail to create shareholders' value
  • Role of a leader in making merger successful
  • The importance of cultural compatibility in making mergers successful
  • The global PC industry structure

Contents

Keywords

HP, Compaq, Mergers and Acquisitions, Merger Integration, Analysis of a Merger, Product Integration, Cultural Mismatch, Competitive Advantage, Restructuring, HP's Corporate Organization, Dell Computers, IBM

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