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Strategic Logic of the Merger: The View of an Internal Skeptic
HP’s longtime CFO and 34-year company veteran, Robert R. Wayman, was an important early
skeptic of the merger who became convinced it was the right move for HP. Wayman said:
13 “The Digital Dilemma,” Economist, July 20, 2000. This document is authorized for use by Xiaolei Cong, from 11/30/2012 to 2/28/2013, in the course:
MGMT 237: 001 Management of Technology - Chaudhuri (Spring 2013), University of Pennsylvania.
Any unauthorized use or reproduction of this document is strictly prohibited. HP and Compaq Combined: In Search of Scale and Scope, SM-130 p. 8 As CFO, I think one of my jobs is to be skeptical of major uses of capital,
particularly mergers and acquisitions because they are so challenging and
difficult. I usually just say ‘prove it to me.’ I get paid to make sure that the
typical excitement of the business folks, once they get into something, doesn’t
ignore the real economics, because they may have a problem to solve, or because
they may want to be a bigger presence in the marketplace. Those are all real,
legitimate issues, but they are not reasons to spend money on a bad purchase.
This was a little different in that it came from the two CEOs. So it was very
friendly, or potentially friendly from the beginning, on a higher level. But still,
my initial reaction was, we’ll look at this for two to three weeks and bye-bye,
move right on.14
As he looked further into the proposed merger, Wayman saw more and more that he liked.
According to Wayman, the deal was a “consolidation merger, so cost synergies are potentially
significant.” Because HP was already in the businesses it would acquire from Compaq, Wayman
felt that HP was in a good position to evaluate the risks as opposed to “extension” mergers where
companies acquire unfamiliar lines of business, enter new geographies.
An important feature of the consolidation m...
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This document was uploaded on 02/16/2014 for the course MGMT 237 at UPenn.
- Spring '14