BT in Talks to Sell Data Centers to HP

• By theWHIR.com , May 13, 2008

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May 13, 2008 -- (WEB HOST INDUSTRY REVIEW) -- British telecommunications provider BT Group (btplc.com) is believed to be in talks to sell its British data centers to electronics manufacturer Hewlett-Packard HP (hp.com) in a deal worth approximately $2.9 billion. The move would deepen the relationship established by the two companies four years ago.

The agreement, which was first reported by the Sunday Times, will see HP take over 24 of BT's data centers in the UK, along with 400 BT employees, while BT will continue to access the facilities under a ten-year deal.

In addition to the $2.9 billion cash, BT would get contracts to manage more of HP's voice and data network, which it already runs in Europe. The deal would extend its management globally.

Although a more integrated relationship between the two companies raises speculation that they could be heading for a merger in the long term, the Sunday Times says insiders are "playing down" the prospect.

BT and HP first agreed to team up four years ago in an effort to win large IT-services contracts as the information technology and telecommunications sectors began to merge.

Under the arrangement then, BT took over HP's European voice and data networks while HP managed BT's IT infrastructure in Britain. Today, HP and BT support each other's contract bids and it is believed the two companies will start submitting joint bits for outsourcing contracts more often, according to reports by Forbes.

The deal will reportedly be finalized in the next few weeks.

Early Tuesday morning, it was announced that HP had reached an agreement to acquire Electronic Data Systems for $12.6 billion.

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