The New York Times: As Hewlett-Packard and Compaq Show, Mergers and Acquisitions Cycle All About Buy, Divide and Conquer

In the fall of 2001, Hewlett-Packard announced a momentous $25 billion merger with Compaq, as commented by The New York Times.

“This is a decisive move that accelerates our strategy and positions us to win by offering even greater value to our customers and partners,” declared Carly Fiorina, HP’s chairwoman and chief executive at the time, describing how the deal would “create substantial share owner value.”

Thirteen years later, just this fall, Meg Whitman, HP’s current chairwoman and

Mergers and Acquisitions Conference 2015 New York City

Mergers and Acquisitions Conference 2015 New York City

chief executive, undid that deal, splitting the company in two. “It will provide each new company with the independence, focus, financial resources and flexibility they need to adapt quickly to market and customer dynamics.”

Eerily mirroring Ms. Fiorina’s words, she said the divorced companies “will be in an even better position to compete in the market, support our customers and partners, and deliver maximum value to our shareholders.”

So which was the right decision? The merger or the spinoff?

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