It has been announced that Hewlett-Packard is set to takeover Compaq at an estimated deal of £17bn, making them one of the largest Information Technology company in the world. The merger will generate a sales revenue of £60bn just falling shortly behind IBM’s sales of £63 bn.
The merger appears to be a complimentary one. Ian Berton, regional Director of hardware platforms at analyst group Gartner Databases Asia-Pacific unit states, “at the high end, they don’t compete head to head. Their competition is IBM and Sun.....In the PC market they fight against Dell and in handhelds against Palm. But there will still have to be a huge rationalisation of the product line and the branding”.
HP’s chief executive officer states that the merger will provide a “significant cost-structure improvements”. According to a joint statement the deal is expected to create savings up to £1.4bn in 2003 and £1.75bn by mid financial 2004.
The downside however will be the inevitable job loss. The merger will create numerous duplicate jobs. Combined, the companies have a workforce of 145, 000 employees in 160 countries. “All the employees in duplicated positions will be looking over their shoulders, and will effectively have to apply for their jobs again. This will have to be done in a fair and equitable way, which will take a long time”.
The overall merger is predicted to take between 12 and 18 months.
