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
Date of Report (Date of earliest event reported): January 25,1998
COMPAQ COMPUTER CORPORATION
(Exact Name of Registrant as Specified in Charter)
DELAWARE 1-9026 76-0011617
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
20555 SH 249, HOUSTON, TEXAS 77070-2698
(Address of Principal Executive Offices)
(281) 370-0670
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events.
On January 25, 1998, Compaq Computer Corporation, a Delaware corporation
("Compaq") and Digital Equipment Corporation, a Massachusetts corporation
("Digital"), 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 with and into Digital, with Digital to be the surviving
corporation of such merger (the "Merger"), 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 (the "Digital
Common Stock"), of Digital (other than shares held by Compaq, any subsidiary
of Compaq or dissenting stockholders of Digital) will 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 cash, and (y) each issued and outstanding share of
Series A 8-7/8% Cumulative Preferred Stock, par value $1.00 per share (the
"Digital Preferred Stock") of Digital (other than shares held by Compaq, any
subsidiary of Compaq or dissenting stockholders of Digital) will, 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 shall have the same rights, privileges and preferences with
respect to Compaq as the Digital Preferred Stock has with respect to Digital,
and shall have the same terms as those contained in Digital's Articles of
Organization as currently in effect, except that the issuer shall be Compaq
and the par value shall be $0.01 per share. In the event that the approval of
the holders of Digital Preferred Stock to the Preferred Stock Conversion is
not obtained, the Digital Preferred Stock shall remain issued and outstanding
after the Merger as Digital Preferred Stock.
A press release announcing the entering into of the Merger Agreement was
issued on January 26, 1998 and is attached hereto as Exhibit 99.
Item 7. Exhibit - Index
Exhibit 99 -- News Release 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.
January 27, 1998 COMPAQ COMPUTER CORPORATION
/s/ Linda S. Auwers
_______________________________
Linda S. Auwers
Vice President and Associate
General Counsel
Exhibit 99
Compaq Computer Corporation P.O. Box 692000
Public Relations Department Houston, Texas
77269-2000
Tel 281-514-0484
Fax 281-514-4583
http://www.compaq.com
NEWS RELEASE
[Logo of Compaq Computer Corporation appears here]
FOR IMMEDIATE RELEASE
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Compaq to Acquire Digital for $9.6 Billion
Creates the Second Largest Computing Company in the World
Largest acquisition in the history of the computer industry will deliver
Global services and support, best of breed partnerships, and unique leadership
products for enterprise customers
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 scalable 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 Corp. Digital Equipment Corp.
281-514-2510 978-493-2195
[email protected] [email protected]
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For further financial information, contact:
Compaq Investor Relations 281-514-9549
For financial publications, contact: 800-433-2391 or 281-518-0435
