HP Buying EDS for $12.6 Billion

• By theWHIR.com , May 13, 2008

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May 13, 2008 -- (WEB HOST INDUSTRY REVIEW) -- In a deal that will give the world's largest maker of personal computers a significant chunk of data management and enterprise consulting business, Hewlett-Packard (hp.com) reported on Tuesday that it would acquire Electronic Data Systems (eds.com) for about $12.6 billion.

Reports that the companies were in talks began arriving early Monday evening. But the talks apparently moved quickly, as the companies had issued an official statement Tuesday morning, saying their boards had unanimously approve the deal, which gives EDS shareholders $25 per share.

The deal, which should close in the second half of 2008, is expected to more than double HP's revenue from services, and should create a realistic challenger to IBM in the services space.

"The combination of HP and EDS will create a leading force in global IT services," said Mark Hurd, HP's chairman and chief executive officer, in the press release. "Together, we will be a stronger business partner, delivering customers the broadest, most competitive portfolio of products and services in the industry. This reinforces our commitment to help customers manage and transform their technology to achieve better results."

HP says the combined services business will be headquartered at EDS's Plano, Texas headquarters and led by EDS chairman and CEO Ronald A. Rittenmeyer. The combined unit would employ more than 210,000 and have operations in 80 countries, although it is certainly possible that staff would be trimmed somewhat following the acquisition.

HP has been trying to expand its presence in the technology consulting and data management field for years. It unsuccessfully tried to buy PricewaterhouseCoopers' consulting division in 2000.

The deal is the biggest acquisition by HP since it bought Compaq in 2002 for $19 billion.

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