SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 25, 1998
(Date of earliest event reported)
Digital Equipment Corporation
(Exact name of Registrant as specified in its charter)
Massachusetts 1-5296 04-2226590
(State of (Commission (IRS Employer
Incorporation) File No.) Identification No.)
111 Powdermill Road, Maynard, Massachusetts 01754
(Address of principal executive offices, including zip code)
(978) 493-5111
(Registrant's telephone number, including area code)
INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events.
On January 25, 1998, Digital Equipment Corporation, a Massachusetts
corporation (the "Digital"), and Compaq Computer Corporation, a Delaware
corporation ("Compaq"), entered into an Agreement and Plan of Merger (the
"Merger Agreement"). Pursuant to the Merger Agreement and subject to the
terms and conditions set forth therein, a newly formed wholly-owned
subsidiary of Compaq will be merged (the "Merger") with and into Digital,
and as a result of the Merger, Digital will become a wholly-owned
subsidiary of Compaq. At the Effective Time (as defined in the Merger
Agreement) of the Merger, (x) each issued and outstanding share of common
stock, par value $1.00 per share, of Digital (the "Digital Common
Stock"), together with the Rights (as defined in the Merger Agreement)
attached thereto, will (other than shares held by Digital as treasury
stock, owned by Compaq or any of its subsidiaries, or held by dissenting
stockholders of Digital) be converted into the right to receive (i) 0.945
shares of common stock, par value $0.01 per share, of Compaq and (ii)
$30.00 in cash, and (y) each issued and outstanding share of Series A
8-7/8% Cumulative Preferred Stock, par value $1.00 per share, of Digital
(the "Digital Preferred Stock"), will (other than shares held by Digital
as treasury stock, owned by Compaq or any of its subsidiaries, or held by
dissenting stockholders of Digital), subject to the following sentence,
be converted (the "Preferred Stock Conversion") into the right to receive
one share of Series A Cumulative Preferred Stock of Compaq, which will
have the same rights, privileges and preferences with respect to Compaq
as the Digital Preferred Stock has with respect to Digital, and will have
the same terms as those contained in Digital's Restated Articles of
Organization, as amended and currently in effect, except that the issuer
will be Compaq and the par value will be $0.01 per share. In the event
that the Preferred Stock Conversion is not approved by the holders of
Digital Preferred Stock, the Digital Preferred Stock will remain issued
and outstanding after the Merger as Digital Preferred Stock.
On January 26, 1998, Digital issued a press release which is filed
herewith as Exhibit 99 and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
Exhibit 99 - Press Release of Digital Equipment
Corporation dated January 26, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, hereunto duly authorized.
DIGITAL EQUIPMENT CORPORATION
By: /s/ Robert B. Palmer
Robert B. Palmer
Chairman of the Board, President
and Chief Executive Officer
Dated: January 29, 1998
EXHIBIT INDEX
Exhibit No. Description
99 Press Release of Digital Equipment Corporation
dated January 26, 1998.
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, Compaq.
"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 economic tests."
"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
scaleable 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.
Company Backgrounds
Compaq Computer Corporation, a Fortune 100 company, is the fifth
largest computer company in the world and the largest global supplier
of personal computers, delivering useful innovation through products
that connect people with people and people with information. The
company is an industry leader in environmentally friendly programs
and business practices. Compaq is strategically organized to meet
the current and future needs of its customers, offering Internet and
enterprise computing solutions, networking products, commercial PC
products and consumer PCs. As the leader in distributed enterprise
solutions, Compaq has shipped over a million servers. In 1997, the
company reported worldwide sales of $24.6 billion. 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 can be found at
http://www.Compaq.com or by calling 1-800-OK-COMPAQ. Product
information and 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 http://www.newsdesk.com
This release contains forward-looking statements based on current
expectations that involve a number of risks and uncertainties. The
potential risks and uncertainties that could cause actual results to
differ materially included the operational integration associated with
mergers and acquisitions; market responses to pricing actions and
promotional programs; the implementation of operations and systems
improvements; timely development, production, and acceptance of the
products; continued competitive factors and pricing pressures; changes
in product mix; and inventory risks due to shifts in market demand.
Further information on the factors that could affect the companies'
financial results are included in each company's SEC filings, including
the Compaq Form 10-Q for the quarter ended Sept. 30, 1997, and the Form
10-K for the year ended Dec. 31, 1997, to be filed shortly, and the
Digital Form 10-Q for the quarter ended Dec. 27, 1997, and the Form
10-K for the year ended June 30, 1997.
# # #
Compaq, Registered U.S. Patent and Trademark Office. Digital is a
registered trademark of Digital Equipment Corporation. Tandem is a
registered trademark of Tandem Computers Incorporated in the United
States and/or other countries. Product names mentioned herein may be
trademarks and/or registered trademarks of their respective companies.
For more information contact:
Mike Berman Dan Kaferle
Compaq Computer Corporation Digital Equipment Corporation
281-514-2510 978-493-2195
[email protected] [email protected]
For further financial information contact:
Compaq Investor Relations: 281-514-9549
For financial publications, contact 800-433-2391 or 281-518-0435
