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Compaq Strengthens Global Services Unit by Acquiring Proxicom
Compaq Computer Corporation (NYSE: CPQ) today announced an agreement to acquire Proxicom, Inc., (NASDAQ: PXCM), a leading e-business consulting and professional services firm, for $5.75 per share in cash for the outstanding stock. The aggregate purchase price, net of current cash, is $266 million.
"The addition of Proxicom will strengthen Compaq's value proposition to customers by supporting our already significant presence in telecommunications and financial services markets, and extending our capabilities in markets including retail, automotive, manufacturing, and media and entertainment," said Peter Blackmore, executive vice president, Worldwide Sales and Services of Compaq. "Proxicom maximizes many of our existing enterprise customer relationships, deepening and broadening our value within these accounts due to both its vertical market expertise and robust skills in e-business, wireless and emerging technologies."
Under the terms of the acquisition agreement, Compaq will promptly commence a tender offer for all outstanding Proxicom shares. Any Proxicom shares not acquired by Compaq in the tender offer will be acquired in a second step merger. This acquisition is subject to customary closing conditions and government approvals, and is expected to be completed toward the end of the second quarter. The board of directors of each company has approved the acquisition and two of Proxicom's largest shareholders, Proxicom Chairman and CEO Raul Fernandez and General Atlantic Partners, have agreed to tender their shares into the offer and otherwise support the transaction. The acquisition will be neutral to earnings in the second half of 2001 and accretive in 2002.
"As we stated in our first quarter earnings call this week, Compaq is aggressively focused on five key initiatives to drive increased growth and profitability, including aggressive go-to-market programs, continued product innovation, expansion of global services, permanent reductions in inventory and substantial reduction in structural cost," Blackmore stated. "Clearly, the Proxicom acquisition is a strong step in growing our $7 billion Global Services business and in providing complete end-to-end solutions to customers."
Compaq Global Services is one of the largest and most experienced service organizations in the industry. Built on more than 40 years of experience, the unit's 38,000 professionals deliver consulting, integration, management and support services in more than 200 countries.
Proxicom will be a wholly owned subsidiary of Compaq Computer Corporation reporting to Jeff Lynn, vice president and general manager, Compaq Global Services. The unit will be called Proxicom, a Compaq Global Services Company.
"We believe that the customer-oriented synergies across Compaq and Proxicom in skill set and culture will help ensure a smooth integration of our businesses," Lynn said. "Proxicom's great customer relationships, depth of talent and proven track record will further enhance our ability to bring innovative solutions to customers around the world."
Proxicom, Inc., founded in 1991, has grown to be one of the leading consulting and professional development firms, pioneering a unique approach to deliver e-business solutions for global enterprise clients through the integration of Internet technologies, strategies and creative design. The company provides specialized e-business development expertise across a broad spectrum of industry segments.
"We are delighted to be joining Compaq with whom we've worked in both customer and partner roles," said Proxicom founder Fernandez. "By pooling our expertise and sharing best practices across our organizations, we will be able to offer broader, enhanced capabilities to our clients and increased opportunities to our employees."
Visitors will be able to access the live webcast via the PressPaq virtual press kit at http://www.compaq.com/newsroom/presspaq/042601/index.html.
ADDITIONAL ACQUISITION INFORMATION
Supports Compaq's Strategy
A key initiative in Compaq's strategy is to grow the Compaq Global Services business to be 30 percent of the company's revenues. Additionally, the company wants to strengthen its industry expertise and ability to deliver complete end-to-end solutions to global enterprise customers. This objective will be achieved through a combination of organic growth and acquisitions. The Proxicom acquisition is the first such action and will strengthen Compaq's offerings in professional services, specifically in telecommunications, financial services, manufacturing, retail, and media and entertainment, as well as provide complementary professional and management talent.
Proxicom was founded in 1991 as a systems integrator. In 1994, when most new Web site development companies were setting up elementary pages, Proxicom was already building robust, e-commerce enabled sites that integrated existing mainframe applications and databases. Today, Proxicom's clients include AOL Time Warner, General Electric, General Motors, Merrill Lynch, Marriott International, and Toyota Motor Sales, USA and over 1,000 engagements for leading corporations.
Proxicom has industry-specific expertise in automotive and manufacturing, communications and high technology, consumer goods and retail, energy, financial services, media and entertainment and services industries. The company is primarily based in North America. It has 950 total employees, and approximately 12 to 15 percent of its revenue is international.
Compaq's Vertical Market Presence
Compaq's solutions in the financial services and telecommunications sectors currently represent 30 percent of revenue for Compaq's Global Services. Compaq has implemented the solutions that are responsible for 80 percent of all financial services transactions and 95 percent of the world's securities transactions. Its customers include BankAmerica, NASDAQ, London Stock Exchange and Raymond James Financial Services.
In the telecommunications sector, 35 telecom operators use Compaq products and over 35 million customers depend on Compaq for wireless services. Companies like British Telecom, Sprint, Cable and Wireless, and RoadRunner look to Compaq to provide complete solutions for rapid deployment. Today, Compaq equipment and services manage 80 percent of all telecoms billing and customer care in Europe and Asia.
Most recently, Target Corporation chose Compaq's Zero Latency Enterprise (ZLE) architecture to redefine its customer relationship environment.