Under the terms of the deal, one of the largest in the technology sector, HP shareholders will own 64% of the combined company and Compaq’s shareholders holding the remaining shares. If the deal succeeds, the combined entity should lead the global market in areas such as Unix servers, imaging and printing and will challenge Dell’s position as the world’s largest PC maker.
The deal is expected to generate cost savings of $2.5 billion by fiscal 2004, according to news agency Reuters.
The new entity will be based at HP’s headquarters in Palo Alto, California, but a “significant presence” will remain in Houston where Compaq is currently based. The combined group will operate in over 160 countries world wide, with over 145,000 employees, although layoffs are expected.