HP to buy EDS

Technology firm Hewlett-Packard on Monday said it will acquire technology services firm Electronic Data Systems for an estimated $13.9 billion.
EDS holds 60.9 per cent in the Indian firm Mphasis. HP’s deal may trigger open offer for Mphasis, which saw it stock close up by 9.88 per cent in Tuesday’s trade.
In this regard, both companies have signed a definitive agreement, under which HP would buy Electronic Data Systems at a price of $25 per share, valuing the company at about $13.9 billion.

The transaction is expected to close in the second half of 2008, HP said in a statement.

The deal is expected to more than double HP's services revenue, which amounted to $16.6 billion in fiscal 2007.

According to the statement, HP intends to establish a new business group, to be branded EDS and headquartered at Electronic Data Systems' existing executive offices in Plano, Texas.

After the deal, HP plans that EDS would continue to be led by Electronic Data Systems Chairman, President and Chief Executive Officer Ronald A Rittenmeyer.

He would join HP's executive council and report to Mark Hurd, HP's chairman and chief executive officer, the statement added.

The terms of the transaction have been unanimously approved by the boards of HP and Electronic Data Systems.

The companies' collective services businesses, as on the end of each company's 2007 fiscal year, had annual revenues of more than $38 billion and 2,10,000 employees. The two had operations in more than 80 countries