Hewlett Packard (HP) has confirmed that it is acquiring IT services firm Electronic Data Systems (EDS) in a deal worth around $13.9 billion.
In a statement HP says it has signed a definitive agreement to purchase Texas-based EDS at a price of $25.00 per share. The deal is worth $13.9 billion including debt, says HP.
HP admitted yesterday that it was in "advanced discussions" with EDS regarding a possible business combination following a Wall Street Journal (WSJ) report stating the two companies were close to a deal.
In today's statement HP says the deal will more than double its services revenue, which amounted to $16.6 billion in fiscal 2007. The companies' collective services businesses, as of the end of each company's 2007 fiscal year, had annual revenues of more than $38 billion and 210,000 employees, doing business in more than 80 countries.
"The combination of HP and EDS will create a leading force in global IT services," says HP chairman and chief executive officer Mark Hurd. "Together, we will be a stronger business partner, delivering customers the broadest, most competitive portfolio of products and services in the industry."
The move gives HP a major boost in the consulting and services sector as it looks challenge to market leader IBM.
HP says it 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. EDS will continue to be led after the deal closes by chairman, president and chief executive officer Ronald Rittenmeyer, who will join HP's executive council and report to Hurd.
HP says the acquisition, which has been "unanimously approved" by the HP and EDS boards of directors, is expected to close in the second half of the year, subject to customary closing conditions.