HP/Compaq: Integration plans continue

Hewlett-Packard has begun to detail plans of its integration with Compaq Computer, looking ahead to when the merged entity...

Hewlett-Packard has begun to detail plans of its integration with Compaq Computer, looking ahead to when the merged entity formally exists.

In a statement yesterday with the US Securities and Exchange Commission (SEC), HP said it expects a certified tally of the 19 March shareholder vote within a few weeks, which would show a majority in favour of the acquisition of Compaq.

"Day One" (the first day of integration) will occur some time following the legal close of the acquisition, with an internal memo last week suggesting that late May is a probable date.

Product roadmaps and additional management appointments will be released on Day One. But HP admitted that structuring the new entity and deciding who stays and who goes will take several months.

Most of the 150,000 employees at HP and Compaq will be unaffected by the merger and will continue in the same jobs. However, about 10% of the workforce is likely to go, HP admitted two weeks ago.

Two methods will be used to structure the workforce of the new company. HP refers to these as "adopt and go" and "managed selection".

In adopt and go, strategic units from either HP or Compaq will migrate as an almost-complete entity into the new HP. This method will be used where the merged entity has to make a clear choice between directly competing business or product groups in HP and Compaq, with the winner surviving almost intact.

Managed selection will form new business groups by combining employees from HP and Compaq. Senior managers will choose their subordinates, and this process will continue on a top-down basis until the group is fully staffed, HP said. Examples of business units likely to go through managed selection are finance functions or sales and management functions, HP said.

Layoffs and severance payments will vary in time and structure from country to country, depending on local employment laws, HP said.

HP also said it was not concerned about Hewlett's lawsuit to block the merger on the grounds that HP improperly solicited votes from some large shareholders. That lawsuit will go forward to trial on 23 April.

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