COMPAQ TO ACQUIRE DIGITAL FOR $9.6 BILLION
Creates the Second Largest Computing Company in the World
NEW YORK, January 26, 1998 - Compaq Computer Corporation (NYSE: CPQ) and Digital
Equipment Corporation (NYSE: DEC) today announced the completion of a definitive
merger agreement. As Compaq continues its drive to become the global leader in
enterprise computing solutions, this latest acquisition greatly accelerates its
momentum and strengthens its value proposition to customers.
"We put tremendous value on the customer relationships Digital has cultivated
over the past 40 years. We are committed to supporting these key customer
relationships by investing in Digital's strategic assets, particularly its
worldwide service organization, as well as its 64-bit leadership with Alpha
microprocessors, OpenVMS, Digital UNIX and Windows NT enterprise systems, open
storage and software products," said Eckhard Pfeiffer, president and CEO,
"Digital's focused enterprise strategy coupled with demonstrable improvements in
operational performance make this a timely choice for us," Pfeiffer said. In
Digital's recently reported second quarter, profits doubled and the company
experienced tremendous growth in its target markets.
The transaction will be the largest acquisition in the history of the computer
industry, valued at $9.6 billion based on the January 23, 1998 closing price of
Compaq common stock. Under the terms 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. Compaq will issue approximately 150 million
shares of Compaq common stock and $4.8 billion of cash. Under the terms of the
agreement, Digital will become a wholly owned subsidiary of Compaq.
"The combined companies will provide significant economic value growth for our
shareholders," said Earl Mason, chief financial officer of Compaq. "In addition,
the combination will be accretive within a year, meeting all of Compaq's
"This merger gives Digital tremendous reach and credibility in the marketplace,"
said Digital Chairman Robert B. Palmer. "It gives us the scale and resources to
make continued investments in our key technologies and services. Customers will
benefit from the very complementary strengths of both companies. For example,
together we will offer customers the greatest concentration of enterprise
Windows NT products and lifecycle services available in the market today."
Pfeiffer said the combination achieves Compaq's stated goal of becoming one of
the top three global IT companies. More importantly, it creates a new breed of
enterprise leader; one committed to delivering high customer value through
standards-based, partner-leveraged computing that features world class lifecycle
services and support, market-segment focused solutions, particularly
communications, manufacturing and finance, and enterprise technology excellence.
The combined company will create the largest channel network in the world
delivering over 80 percent of its products and solutions to customers. Compaq's
field resources will continue to complement the strong reseller channel,
focusing on building enduring customer relationships worldwide. These resources
include individuals dedicated to pre-sales and sales account management,
professional and consulting services and global service and support.
The acquisition of Tandem Computers in 1997 extended the company's addressable
market with high-end, mission-critical solutions and doubled the sales and
service field resources. In 1998, the Compaq/Digital/Tandem combination further
strengthens the focus on creating competitive advantage for enterprise customers
by delivering the widest range of technology based solutions from hand-helds,
notebooks, desktop computers, workstations, servers; high-end servers based on
the 64-bit Alpha architecture and highly available and scalable NonStop systems.
Subject to the approval of Digital's shareholders as well as clearance under
antitrust laws and other customary closing conditions, the transaction is
expected to be completed in the second quarter of 1998.
Compaq Computer Corporation, the world's largest computer manufacturer, is a
Fortune 200 company and the largest global supplier of personal computers.
Founded in 1982, Compaq develops and markets hardware, software, solutions and
services including industry-leading enterprise computing solutions, fault-
-tolerant business-critical solutions, networking and communications products,
commercial desktop and portable products and consumer PCs. The company is a
leader in environmentally friendly programs and business practices.
Compaq products are sold and supported in more than 100 countries through a
network of authorized Compaq marketing partners. Customer support and
information about Compaq and its products are available at www.compaq.com or by
calling 1-800-OK-COMPAQ. Product information and North America reseller
locations can be obtained by calling 1-800-345-1518.
Digital Equipment Corporation, recognized for product and service excellence,
is a leading supplier of high-performance, Web-based computing solutions, which
help enterprises compete in the global marketplace. Digital gives its customers
a winning Internet advantage through a comprehensive portfolio of Internet
solutions based on award-winning systems, advanced networking infrastructure,
innovative software, and industry applications - including those from its
business partners. The expertise and experience of Digital employees help
customers plan, design, implement, manage and support Internet solutions in
countries throughout the world. For the latest company information, visit
Digital on the World Wide Web at http://www.digital.com and/or