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Mergers & Acquisitions

Mergers & Acquisitions are new & quite confusing to me. I have to write a 750 word essay which I determine the valuation criteria and technique Hewlett Packard used to select Compaq and explain the pros and cons for that selection. Then I must analyze the negotiation and bidding process for this Merger & Acquisiton. Please be sure to cite references.

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Mergers & Acquisitions are new & quite confusing to me. I have to write a 750 word essay which I determine the valuation criteria and technique Hewlett Packard used to select Compaq and explain the pros and cons for that selection. Then I must analyze the negotiation and bidding process for this Merger & Acquisition. Please be sure to cite references.

One way of valuation the Compaq takeover by Hewlett Packard is the price paid to shareholders. The Compaq shareholder received 0.6325 of the newly issued HP shares for each share of Compaq. However, a large number of criteria used for evaluating Compaq were subjective in nature. The claim of Hewlett Packard is that taking over Compaq would bring synergies. The company claimed that the products and the organization of the two companies were complementary. From the perspective of marketing this argument is acceptable. The person that bought a computer also bought a printer, and offering a large range of computers, peripherals and printers brings with it some marketing advantage. Another criteria for the acquisition used by Hewlett Packard was that the acquisition would lead to an increase in size/competitiveness. The new Hewlett Packard could challenge any other computer company including IBM.
Another criteria used by Hewlett Packard to select Compaq was that the combination of the two companies would lead to substantial savings in cost. The combined company would save $390 ...

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