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HP bags EDS for US$13.9 billion

by Stuart Wilson, Tuesday 13 May 2008

HP has reshaped the global IT services landscape with its blockbuster US$13.9 billion agreement to buy EDS. The deal, which is expected to close in the second half of calendar 2008, is expected to more than double HP’s service revenues, which hit US$16.6 billion in full year 2007. Combined, the service businesses of HP and EDS pulled in sales of US$38 billion in 2007, employed some 210,000 employees and worked in more than 80 countries.

HP intends to establish a new business group, to be branded EDS - an HP company, which will be headquartered at EDS’s existing executive offices in Plano, Texas. HP plans that EDS will continue to be led after the deal closes by EDS chairman, president and CEO Ronald A. Rittenmeyer, who will join HP’s executive council and report to Mark Hurd, HP’s chairman and CEO.

"The combination of HP and EDS will create a leading force in global IT services," said Hurd. "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."

Rittenmeyer added, "First and foremost, this is a great transaction for our stockholders, providing tremendous value in the form of a significant premium to our stock price. It’s also beneficial to our customers, as the combination of our two global companies and the collective skills of our employees will drive innovation and enhance value for them in a wide range of industries. In addition, our Agility Alliance will be significantly strengthened."

Acquiring EDS advances HP’s goal of strengthening its services business. The specific service offerings delivered by the combined companies are: IT outsourcing, including data centre services, workplace services, networking services and managed security; business process outsourcing, including health claims, financial processing, CRM and HR outsourcing; applications, including development, modernisation and management; consulting and integration; and technology services.

The combination will provide extensive experience in offering solutions to customers in the areas of government, healthcare, manufacturing, financial services, energy, transportation, communications, and consumer industries and retail.

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