Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.
What Happened? On this day in 1998, Compaq acquired Digital Equipment in the largest buyout in the history of the computer industry.
Where The Market Was: The Dow closed at 8,811.77. The S&P 500 traded at around 109.41.
What Else Was Going On In The World? In 1998, The European Central Bank was established in Frankfurt. Exxon and Mobil merged to create the world’s largest petroleum company, Exxon Mobil Corporation (NYSE:XOM). A gallon of gasoline cost $1.15.
Compaq Goes Big: In June of 1998, Compaq announced a $9.6 billion buyout of Digital Equipment, a major player in the U.S. computer industry since the 1950s. At the time of the deal, it was the largest buyout in the history of the computer business. Digital Equipment was part of a series of buyouts Compaq had made in a push to gan enterprise customers. DEC was a particularly compelling target for Compaq due to its overseas presence, which Compaq was lacking at the time.
In the conference call following the announcement, Compaq said the combined revenue of the two companies in 1997 was $37.5 billion.
Unfortunately, the aggressive M&A strategy put Compaq in a difficult financial situation when the dot-com bubble burst a couple of years later. In 2002, HP Inc. (NYSE:HPQ) acquired a struggling Compaq for $25 billion.
