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 article relating to the Merger summarizes the views of several
authors and professionals in the field of mergers and aquisitions regarding
the general topic, "Merger Best Practices." The article is posted on HP's
internal web site as a feature article.
MERGER BEST PRACTICES
BY PAUL MATALUCCI
A merger, like any change or opportunity, involves uncertainty and risk. Studies
show that up to 70 percent of mergers -- across various industries -- fail to
generate net profits greater than the sum of their previously independent parts.
While this statistic may seem daunting, it's important to remember that a large
number of mergers succeed, sometimes spectacularly. Companies can learn from
this latter group. Even within HP and Compaq, a lot of practical wisdom has been
learned from previous merger experience. By using best practices, HP and Compaq
will increase the odds of being part of the successful 30 percent.
MERGER BEST PRACTICES
If you wanted to learn how to make a merger succeed, you'd ask the people who
are merger experts.
What follows is a summary of advice from a number of experts in the field of
mergers and acquisitions, including thoughts from best-selling author Dr.
Stephen Covey (SEVEN HABITS OF HIGHLY EFFECTIVE PEOPLE) and Bob Mountain,
founder of Strategic Change Management, a Silicon Valley-based consulting firm
that supports corporations engaged in mergers and acquisitions.
In a broad sense, there are four areas upon which companies should focus on to
bring about a successful merger: integration teams, regular communications,
speed and decisiveness, and customer focus.
INTEGRATION TEAMS. Experts agree that the first step is to assign a team to work
on the integration. This team should be made up of the company's best people,
not just people
who are available, and they should have the freedom to focus on the merger full
time.
HP and Compaq have already implemented this first best practice and assigned
some of their most capable and experienced people -- representing the spectrum
of businesses and functions -- to the integration team. The team is led by
32-year HP veteran Webb McKinney and Compaq's Chief Financial Officer Jeff
Clarke.
COMMUNICATIONS. Not surprisingly, consistent and accurate communication ranks
high on most lists of merger best practices. People -- employees, investors,
partners, customers, shareowners -- need to understand the strategic rationale
behind the merger; they need to be engaged by a compelling vision of the future.
An article in the May 2001 edition of TRAINING magazine observes, "You can do
the deal because it looks really good on paper, but if you don't engage the
minds of the people from each culture, you won't get the productivity you need
to be successful." HP and Compaq have dedicated resources addressing merger
communications.
SPEED AND DECISIVENESS. While speed is always critical in business, speed in
merger execution is vital. Without it, companies can get bogged down with
internal merger details and lose external market focus; they can miss
opportunities and make themselves vulnerable to competitors.
Bob Mountain notes that speed and decisiveness are important success factors.
"Successful mergers address the things that need to get done quickly and early
and then allow enough time for the things that take time. Every action needs to
be undertaken on very clearly understood and annunciated principles. Then you
move on."
CUSTOMER FOCUS. "Customers may worry that the company will be too focused on the
work of combining businesses to pay attention to their needs," warns Kristen
Donahue, in an article published in the HARVARD BUSINESS REVIEW. Instead,
companies must actively emphasize their continuing commitment to customers.
In TRAINING, May 2001, Dr. Stephen Covey says, "You need to remain focused on
the marketplace, on the superior value you're delivering to customers as a
result of the merger."
Focus -- at all levels -- is critical. Without it, HP and Compaq customers will
begin to look to the competition to meet their needs. Dell, IBM and many others
stand to gain, should HP and Compaq not continue to compete in the marketplace
in the short term and execute crisply on the integration of the two companies.
Focus, creativity, flawless execution. These have always been a part of success.
During a merger, they're vital.
--------------------------------------------------------------------------------
Paul Matalucci is co-founder of ROI Communications, Inc., a strategic
communications consulting company focused on organizations in change.
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 Compaq transaction 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 Compaq transaction or other planned
acquisitions and the challenges of achieving anticipated synergies; the
possibility that the Compaq transaction 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 Compaq transaction 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 Oct. 31, 2000, and
subsequently filed reports. 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.
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.
* * * * *