Filed by Hewlett-Packard Company Pursuant to Rule 425
Under the Securities Act of 1933
And Deemed Filed Pursuant to Rule 14a-12
Under the Securities Exchange Act of 1934
Subject Company: Compaq Computer Corporation
Commission File No.: 1-9026
This filing relates to a planned merger (the "Merger") between Hewlett-Packard
Company ("HP") and Compaq Computer Corporation ("Compaq") pursuant to the terms
of an Agreement and Plan of Reorganization, dated as of September 4, 2001 (the
"Merger Agreement"), by and among HP, Heloise Merger Corporation and Compaq. The
Merger Agreement is on file with the Securities and Exchange Commission as an
exhibit to the Current Report on Form 8-K, as amended, filed by Hewlett-Packard
Company on September 4, 2001, and is incorporated by reference into this filing.
The following is a message from Webb McKinney, HP's President, Business Customer
Organization, discussing integration efforts in connection with the Merger. The
message is posted on HP's internal web site.
Integration Office Update
Message from Webb McKinney
Since my last integration office update to you, we passed a major procedural
milestone in our proposed merger with Compaq. On November 15, HP and Compaq
submitted their registration statement on Form S-4, which includes the
preliminary joint proxy statement/prospectus, to the U.S. Securities and
Exchange Commission (SEC). The preliminary joint proxy statement/prospectus is
the document that contains information that the SEC requires us to provide to
shareowners before they can vote on the merger.
Overall, the regulatory process is moving along as expected, and we still expect
the merger to close in the first half of 2002.
Reviewing the merger process
The registration statement on Form S-4 describes the proposed merger, including
the terms, the history, the reasons for the proposed merger and risk factors for
investors to consider. The SEC is currently reviewing this document, and we
expect to receive their initial comments soon. HP and Compaq will respond to
these comments and file an amended Form S-4. The definitive joint proxy
statement/prospectus contained in the final S-4 will be mailed to shareowners
and will include the dates for the shareowner meetings.
We are currently in the regulatory approval phase of the merger process. In this
phase, the respective regulatory agencies review a broad range of data and other
factors, including the markets in which both companies operate, the competitive
conditions that existed pre-merger, and the competitive effects of the merger on
those markets. This process is ongoing. We are meeting with regulators on both
sides of the Atlantic - the Federal Trade Commission in the U.S. and the
European Commission in Europe - as well as in other countries where negotiation
is required.
In the U.S., we filed the documents required under the Hart-Scott-Rodino Act.
The initial HSR filing was completed in September. In October, we were asked to
provide additional information - a routine request in large mergers - and we are
responding to this request. The regulatory process is also on track in Europe.
We will file documents following negotiations with regulators there, probably by
the first of next year.
In addition to regulatory approval, of course, we also need shareowner approval.
Despite opposition from the Hewlett and Packard families and their foundations,
we intend to put the merger to a shareowner vote. The opposition of the families
and their foundations has received a lot of attention, and we do not take it
lightly. But it's important to understand that the objectives of these
foundations may be different from those of other shareowners. We remain
committed to winning the approval of our shareowners.
Additional integration planning progress
In addition to regulatory progress, we completed phase 1 of our four-phase
integration planning process and are on track to exit phase 2 later this week. I
will review our phase 2 objectives in my next update. Our phase 1 deliverables
included:
. Defining our Close +1 (C+1) success factors for our four key stakeholders -
employees, customers, partners, and shareowners. We have identified key
requirements or success criteria to ensure we deliver what our customers,
shareowners, employees, and partners will be looking for on C+1.
. Defining our other C+1 deliverables including system availability, payroll
processes, training, etc for key constituents.
. Completing detailed C+1 work plans with interdependencies identified and
linkages called out by business and function.
. Defining top level organizational responsibilities for the new HP.
. Establishing all post merger integration planning teams.
For more information on team structure, timelines, objectives, and our success
criteria for C+1, [see HP's internal web site].
Developing the organization
Understandably, there continues to be a great deal of interest - inside and
outside the company - in how the new HP will be organized. At this point,
anti-trust laws prevent us from discussing the structure of the new organization
except in high-level, directional terms.
As I have said before, structure will be based on strategy. One of our key
integration principles is to start with the customer experience and ensure a
relentless focus on customers and meeting customer needs. In keeping with this
objective, the organizational design of the new hp must enable us to meet the
unique requirements of our major global and named accounts, compete aggressively
in the small and medium business market (SMB), provide world-class solutions to
our targeted industries, and deliver a rich experience for consumers.
We are leveraging the learning and best practices from our own reinvention, as
well as Compaq's experience to build an organization that best serves customers.
We will achieve both the tight strategic and organizational alignment we need to
fully leverage the breadth of our capabilities, to lead the industry in Total
Customer Experience and Total Partner Experience, as well as to win against more
narrowly focused competitors such as Lexmark, Sun, EMC, and Dell. Let me share
some of the decisions made to date regarding our customer-facing organizational
structure. More information will follow in subsequent integration office
updates.
To ensure tight alignment, the three global product groups will host the
following Go-To-Market (GTM) organizations:
. The Imaging and Printing Systems Group (IPS) under Vyomesh Joshi will host
the consumer GTM organization including volume retail channels.
. The Personal Systems Group (PSG), led by Duane Zitzner will host the high
volume commercial channel partners and the high volume direct Internet
selling, as well as the inside sales GTM organizations.
. The Enterprise Systems Group (ESG), headed by Peter Blackmore will host the
Global and Corporate Accounts organizations.
In addition, each group (IPS, PSG, ESG, and Services) will have sales
specialist's and GTM organizations that will focus on category success and
partner with the hosted GTM teams to provide a strong product, services, and
integrated solutions focus.
Frequently asked questions
Before closing, I want address several questions that are consistently asked.
. When will we know about product roadmaps for the new company? We are
committed to make that information available to key stakeholders within 30
days after completion of the merger.
. What is the timing of the merger-related workforce reductions? No
merger-related restructuring can begin before the merger is completed.
Restructuring plans will be developed and implemented by the businesses and
functions, and they could take up to 18-24 months to fully implement. Line
managers will drive the selection process, with representatives from both
companies involved in the decision-making
. What does "clean" mean in relation to merger integration work? The
so-called "clean" employees are those who are doing integration planning
work as their full time assignment. As part of the integration team, these
folks may have access to material and/or confidential information from HP
or Compaq, which cannot legally be utilized in ongoing HP or Compaq
business.
. Can "clean" room employees return to their jobs? Nothing under the
competition laws would prevent "clean" room employees from returning to
their jobs after the merger closes. If for any reason the merger does not
gain regulatory or shareowner approval, each of our "clean" employees will
go through a similar process to that which we use when we hire a new
employee from a competitor.
These employees can remain at HP. However, we will need to understand the
kind of Compaq confidential information that was received while working as
part of the integration planning team in the clean room. Next, we will need
to review the job duties to see if there is a conflict between the
confidential information that was learned and the employees'
responsibilities. Depending upon the circumstances, an employee may return
to the same job, the same job with different responsibilities or, in some
cases, a completely different job where the confidential information is not
relevant.
I encourage you to review the FAQ's posted on [HP's internal web site] to keep
up with the latest, authorized information regarding the merger.
I hope that each of you and your families has a very happy and safe holiday
season.
Webb
FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements that involve risks,
uncertainties and assumptions. If any of these risks or uncertainties
materializes or any of these assumptions proves incorrect, the results of HP and
its consolidated subsidiaries could differ materially from those expressed or
implied by such forward-looking statements.
All statements other than statements of historical fact are statements that
could be deemed forward-looking statements, including any projections of
earnings, revenues, synergies, accretion or other financial items; any
statements of the plans, strategies, and objectives of management for future
operations, including the execution of integration and restructuring plans and
the anticipated timing of filings, approvals and closings relating to the Merger
or other planned acquisitions; any statements concerning proposed new products,
services, developments or industry rankings; any statements regarding future
economic conditions or performance; any statements of belief and any statements
of assumptions underlying any of the foregoing.
The risks, uncertainties and assumptions referred to above include the ability
of HP to retain and motivate key employees; the timely development, production
and acceptance of products and services and their feature sets; the challenge of
managing asset levels, including inventory; the flow of products into
third-party distribution channels; the difficulty of keeping expense growth at
modest levels while increasing revenues; the challenges of integration and
restructuring associated with the Merger or other planned acquisitions and the
challenges of achieving anticipated synergies; the possibility that the Merger
or other planned acquisitions may not close or that HP, Compaq or other parties
to planned acquisitions may be required to modify some aspects of the
acquisition transactions in order to obtain regulatory approvals; the assumption
of maintaining revenues on a combined company basis following the close of the
Merger or other planned acquisitions; and other risks that are described from
time to time in HP's Securities and Exchange Commission reports, including but
not limited to the annual report on Form 10-K for the year ended October 31,
2000 and HP's registration statement on Form S-4 filed on November 15, 2001.
HP assumes no obligation and does not intend to update these forward-looking
statements.
ADDITIONAL INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT
On November 15, 2001, HP filed a registration statement with the SEC containing
a preliminary joint proxy statement/prospectus regarding the Merger. Investors
and security holders of HP and Compaq are urged to read the preliminary joint
proxy statement/prospectus filed with the SEC on November 15, 2001 and the
definitive joint proxy statement/prospectus when it becomes available and any
other relevant materials filed by HP or Compaq with the SEC because they
contain, or will contain, important information about HP, Compaq and the Merger.
The definitive joint proxy statement/prospectus will be sent to the security
holders of HP and Compaq seeking their approval of the proposed transaction. The
preliminary joint proxy statement/prospectus filed with the SEC on November 15,
2001, the definitive joint proxy statement/prospectus and other relevant
materials (when they become available), and any other documents filed by HP or
Compaq with the SEC, may be obtained free of charge at the SEC's web site at
www.sec.gov. In addition, investors and security holders may obtain free copies
of the documents filed with the SEC by HP by contacting HP Investor Relations,
3000 Hanover Street, Palo Alto, California 94304, 650-857-1501. Investors and
security holders may obtain free copies of the documents filed with the SEC by
Compaq by contacting Compaq Investor Relations, P.O. Box 692000, Houston, Texas
77269-2000, 800-433-2391. Investors and security holders are urged to read the
definitive joint proxy statement/prospectus and the other relevant materials
when they become available before making any voting or investment decision with
respect to the Merger.
HP, Carleton S. Fiorina, HP's Chairman of the Board and Chief Executive Officer,
Robert P. Wayman, HP's Executive Vice President, Finance and Administration and
Chief Financial Officer, and certain of HP's other executive officers and
directors may be deemed to be participants in the solicitation of proxies from
the stockholders of HP and Compaq in favor of the Merger. The other executive
officers and directors of HP who may be participants in the solicitation of
proxies in connection with the Merger have not been determined as of the date of
this filing. A description of the interests of Ms. Fiorina, Mr. Wayman and HP's
other executive officers and directors in HP is set forth in the proxy statement
for HP's 2001 Annual Meeting of Stockholders, which was filed with the SEC on
January 25, 2001. Investors and security holders may obtain more detailed
information regarding the direct and indirect interests of Ms. Fiorina, Mr.
Wayman and HP's other executive officers and directors in the Merger by reading
the preliminary joint proxy statement/prospectus filed with the SEC on November
15, 2001 and the definitive joint proxy statement/prospectus when it becomes
available.
Pursuant to an engagement letter dated July 25, 2001, HP retained Goldman, Sachs
& Co. ("Goldman Sachs") to act as its financial advisor in connection with the
Merger. In connection with the engagement of Goldman Sachs as financial advisor,
HP anticipates that employees of Goldman Sachs may communicate in person, by
telephone or otherwise with certain institutions, brokers or other persons who
are stockholders for the purpose of assisting in the solicitation of proxies in
favor of the Merger. Although Goldman Sachs does not admit that it or any of its
directors, officers, employees or affiliates is a "participant," as defined in
Schedule 14A under the Securities and Exchange Act of 1934, as amended, or that
Schedule 14A requires the disclosure of certain information concerning them in
connection with the Merger, Gene Sykes (Managing Director), Matthew L'Heureux
(Managing Director), George Lee (Vice President) and Jean Manas (Vice
President), in each case of Goldman Sachs, may assist HP in the solicitation of
proxies in favor of the Merger.
Compaq and Michael D. Capellas, Compaq's Chairman and Chief Executive Officer,
and certain of Compaq's other executive officers and directors may be deemed to
be participants in the solicitation of proxies from the stockholders of Compaq
and HP in favor of the Merger. The other executive officers and directors of
Compaq who may be participants in the solicitation of proxies in connection with
the Merger have not been determined as of the date of this filing. A description
of the interests of Mr. Capellas and Compaq's other executive officers and
directors in Compaq is set forth in the proxy statement for Compaq's 2001 Annual
Meeting of Stockholders, which was filed with the SEC on March 12, 2001.
Investors and security holders may obtain more detailed information regarding
the direct and indirect interests of Mr. Capellas and Compaq's other executive
officers and directors in the Merger by reading the preliminary joint proxy
statement/prospectus filed with the SEC on November 15, 2001 and the definitive
joint proxy statement/prospectus when it becomes available.
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