The Merger Of Hewlett-Packard And Compaq: Strategy And Value
The Merger of HP and Compaq: Strategy.
When a major merger is announced, like the one between HP and Compaq, investors try to understand where the stock value is going to come from and whether the companies have a plan to achieve that value. Deals are often brought to market with one big synergy number and a statement that the deal will be accretive to earnings.
Many acquisitions and some large strategic investments are often justified with the argument that they will create synergy. In this paper, it is considered the pros and cons of synergy. Also there is an examination of how can be value the synergy of HP and Compaq and how sensitive this value is to different assumptions. Finally a conclusion with an empirical examination of how much synergy was actually created in this corporate merge, and how much was gained or lost.
The term synergy is used mostly in the context of mergers and acquisitions. For example, if Company A has an excellent product but lousy distribution......
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Approximate Word Count: 2059
Approximate Pages: 9 (250 words per double-spaced page)
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