Compaq, Digital unveil merger

$10 billion deal creates rival for IBM

In a nearly $10 billion deal, computing giants Compaq Computer Corp. and Digital Equipment Corp. jointly announced their merger Monday, creating a $40 billion powerhouse that rivals IBM Corp. as hardware’s heaviest hitter.

The merger’s fit is considered nearly optimal – a view reflected by Wall Street’s enthusiastic response to the announcement. Compaq shares held steady, while Digital’s stock price jumped 22%.

Under the terms of the deal, announced jointly by Compaq CEO Eckhard Pfeiffer and Digital chieftain Robert Palmer, Compaq would acquire each share of Digital for $30 and around a share of Compaq stock, a deal worth just over $9.6 billion. (Nearly $5 billion of that was all cash.)

One possible casualty is Digital’s ultrafast Alpha microprocessor. Used by a variety of users, including post-production and digital effects houses as a lower-cost alternative to Silicon Graphics’ Unix-based workstations, the Alpha-based business may be phased out as Compaq’s practical development philosophy takes hold.

Neither Palmer nor Pfeiffer would comment definitively on Alpha’s future.

Want to read more articles like this one? SUBSCRIBE TO VARIETY TODAY.
Post A Comment 0

Leave a Reply

No Comments

Comments are moderated. They may be edited for clarity and reprinting in whole or in part in Variety publications.

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

More Digital News from Variety