Compaq and Digital Merge in Largest Acquisition in Computer History

Compaq Computer Corporation, a leading global provider of enterprise computing solutions, and Digital Equipment Corporation, a prominent supplier of high-performance, Web-based computing solutions, have announced the completion of a definitive merger agreement. The transaction is valued at $9.6 billion and will create the largest channel network in the world, delivering over 80% of its products and solutions to customers. The combined company will provide a unique leadership product for enterprise customers, featuring best-of-breed partnerships, global services and support, and a comprehensive portfolio of Internet solutions.

Key Takeaways:

• The merger creates the largest channel network in the world, delivering over 80% of its products and solutions to customers.
• The combined company will provide significant economic value growth for shareholders, meeting all of Compaq's economic tests.
• The acquisition accelerates Compaq's momentum in becoming a global leader in enterprise computing solutions.
• The transaction will be the largest acquisition in the history of the computer industry, valued at $9.6 billion.
• Shareholders of Digital will receive $30 in cash and approximately 0.945 shares of Compaq common stock for each share of Digital stock.
• Compaq will issue approximately 150 million shares of Compaq common stock and $4.8 billion of cash.
• The combined company will create a new breed of enterprise leader, committed to delivering high customer value through standards-based, partner-leveraged computing.
• The acquisition strengthens Compaq's focus on creating competitive advantage for enterprise customers by delivering a wide range of technology-based solutions.
• The combined company will offer customers the greatest concentration of enterprise Windows NT products and lifecycle services available in the market today.
• The acquisition of Tandem Computers in 1997 extended Compaq's addressable market with high-end, mission-critical solutions and doubled the sales and service field resources.
• Subject to the approval of Digital's shareholders and clearance under antitrust laws, the transaction is expected to be completed in the second quarter of 1998.

Statistics:

• The merger is valued at $9.6 billion, making it the largest acquisition in the history of the computer industry.
• Compaq will issue approximately 150 million shares of Compaq common stock as part of the transaction.
• Shareholders of Digital will receive $30 in cash and approximately 0.945 shares of Compaq common stock for each share of Digital stock.
• The combined company will create the largest channel network in the world, delivering over 80% of its products and solutions to customers.
• In 1997, Compaq reported worldwide sales of $24.6 billion.
• Compaq products are sold and supported in more than 100 countries through a network of authorized Compaq marketing partners.
• Digital has shipped over a million servers as part of its distributed enterprise solutions.

Sources:

• Compaq Computer Corporation, "Compaq and Digital Merger Agreement," Business Wire, January 26, 1998.
• Digital Equipment Corporation, "Digital and Compaq Announce Merger Agreement," Business Wire, January 26, 1998.