CNET también está disponible en español.

Ir a español

Don't show this again

Christmas Gift Guide
Tech Industry

HP-Compaq: Breaking up is hard to do

If Hewlett-Packard's deal to buy Compaq falls apart, both companies stand to lose time, energy and momentum. One of them also could lose $675 million.

If Hewlett-Packard's deal to buy Compaq falls apart, both companies stand to lose time, energy and momentum. One of them also could lose $675 million.

According to documents filed with the U.S. Securities and Exchange Commission, either company could be forced to pay a $675 million breakup fee to the other if it is responsible for the failure of the multibillion-dollar deal.

Specifically, one of the companies would be liable to pay the other if its shareholders were to fail to approve the deal, if its board were to change or withdraw approval of the deal, or if one of the two companies were to cause the deal to be delayed beyond May 30, 2002, or Aug. 30 under certain circumstances.

However, neither company would be liable for the fee should the deal be held up by regulators.

Either company could also be held liable for the giant breakup fee if it were to misrepresent any material facts in the merger agreement.

A Compaq spokesman confirmed the details of the filing.

The value of the deal, initially pegged at $25 billion, has been plummeting as investors have shown their displeasure at the merger, pushing the value of the Compaq buyout below $20 billion.