Hewlett-Packard to acquire Compaq in $25 billion deal

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Palo Alto, Calif.--Hewlett-Packard Co. said late Monday that it was acquiring rival Compaq Corp. for $25 billion in stock in a move that further consolidates the computer sector. If the deal is completed, the merged company would produce revenue only slightly less than that of IBM Corp., the biggest computer company in the world. Under the deal, one Compaq share will be exchanged for 0.6 HP share, providing a premium of around 18%. Both HP and Compaq have recently seen their revenues slide and profits plunge amid the tech slowdown. Compaq's stock is down 76% from last year while HP's has dropped 66%. The proposed combination could raise antitrust concerns and any inquiry by the Justice Department could take months to complete. The companies expect the deal to be completed in the first half of next year. In early morning trading shares of HP were down 2% at $21.15 while Compaq's shares were up 3% at $12.95.
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