EU Will Investigate HP-Compaq Merger

Baldwin Louie — Tue, 04 Sep 2001 15:00:00 -0700

AMSTERDAM - The European Commission will investigate the $25 billion takeover of Compaq Computer by Hewlett-Packard, a Commission spokeswoman said.

"If the deal meets the sales thresholds set forth in the European Union competition regulations, then it will be examined by the Commission," said Amelia Torres, a Commission spokeswoman on competition matters.

Investigation by the Commission, the executive body of the European Union, is standard procedure. All acquisitions in which the revenue of the combined company exceeds 5 billion euros ($4.5 billion), and in which each individual company has revenue of at least 250 million euros ($224.6 million) in the European Union are investigated, Torres said.

HP, with Compaq absorbed, will have $87 billion dollars in revenue, making it one of the world's largest IT companies, based on figures reported from the companies for the last four quarters.

The acquisition has to be reported to the Commission within seven days after signing of the takeover agreement. A standard investigation starts immediately after the merger is reported and takes a month. The Commission then either gives the green light for the deal, or launches an in-depth investigation, Torres said.

With a 25.8 percent combined market share, HP and Compaq will hold a firm No. 1 position in Europe, the Middle East and Asia. Compaq, in the second quarter, had 17.4 percent of the market, followed by Dell Computer with a 10.1 percent share and HP with 8.4 percent, according to figures obtained from market researcher International Data Corp.

The boards of both companies have unanimously approved the merger, HP said. But the deal remains subject to regulatory approval.

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EU Will Investigate HP-Compaq Merger