Johannesburg, 15 May 2008
HP is buying EDS, at a price of $25 per share, or an enterprise value of $13.9 billion. The transaction is expected to close in the second half of calendar year 2008.
According to HP, its revenue from services will more than double as a result of the deal. The company intends to establish a new business group, to be branded EDS - an HP company, to be located at EDS's existing executive offices, in Texas.
Both the HP and EDS boards of directors have unanimously approved the terms of the deal. HP says EDS chairman and CEO Ronald Rittenmeyer will continue to lead the company, and will report to HP chairman and CEO Mark Hurd.
Hurd says the acquisition falls in line with HP's objective of growing its services business, and says significant synergies are expected as a result of the acquisition.
"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 adds: "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."
According to Gartner, worldwide IT services revenue rose 10.5 percent to $748 billion in 2007. IBM was the leader, with a 7.2% market share, followed by EDS, with 3% of the market. HP was No. 5, with a 2.2% share.
HP's local office was not immediately available for comment.
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HP to acquire EDS for $13.9bn
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