An IT services company started by Texan billionaire Ross Perot in 1962 has today been acquired by the world’s largest technology company Hewlett Packard (HP) for US$13.9bn.
HP intends to establish a new business group branded EDS – a HP company – and anticipates the transaction will more than double its service revenue from US$16.6bn last year to in excess of US$33bn a year.
The companies’ collective services business combined had revenues of over US$38bn and 210,000 employees doing business in over 80 countries.
“The combination of HP and EDS will create a leading force in global IT services,” said HP chief executive Mark Hurd.
“Together, we will be a stronger business partner, delivering customers the broadest, most competitive portfolio of products and services in the industry. This re-inforces our commitment to help customers manage and transform their technology to achieve better results.”
The transaction is expected to close in the second half of this calendar year. Under the terms of the merger agreement, EDS shareholders will receive US$25 for each share of EDS common stock they will hold when the merger closes.
Acquiring EDS will advance HP’s strength in a number of key areas, including business process outsourcing, CRM, HR outsourcing and managed security.
“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,” said EDS chief executive Ron Rittenmeyer.
“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,” Rittenmeyer said.
By John Kennedy