Hewlett-Packard Company officials announced that they have signed a $13.9 billion deal to acquire Electronic Data Systems Corp. in an effort to strengthen their services business.
Under terms of the agreement, EDS stockholders will receive $25 for each share of EDS common stock they hold at the closing of the merger.
The transaction is expected to close in the second half of 2008 and more than double HP's services revenues, which amounted to $16.6 billion in fiscal year 2007.
HP anticipates that the transaction will be accretive to fiscal 2009 non-GAAP earnings and accretive to 2010 GAAP earnings. Significant synergies are expected as a result of the combination.
HP intends to establish a new business group, to be branded EDS - an HP company, which will be headquartered at EDS' executive offices in Plano, Texas.
EDS Chairman, President and Chief Executive Officer Ronald A. Rittenmeyer is expected to continue to lead the company and will join HP's executive council, reporting to Mark Hurd, HP's chairman and chief executive officer.
"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."
Acquiring EDS advances HP's objective of strengthening its services business. The specific service offerings delivered by the combined companies are IT outsourcing, including data center services, workplace services, networking services and managed security; business process outsourcing, including health claims, financial processing, CRM and HR outsourcing; applications, including development, modernization and management; consulting and integration and technology services.
"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."