SAN FRANCISCO (AP) - Hewlett-Packard Co. has agreed to
buy Electronic Data Systems Corp. for about $12.6 billion to build a
technology-services company that could challenge IBM.
The companies said Tuesday their boards had unanimously approved the deal,
in which EDS shareholders would get $25 per share. The sale is expected to close
in the second half of this year and more than double HP's revenue from services,
which was $16.6 billion in 2007. EDS had $22.13 billion in revenue last year.
The combined services business would have 210,000 employees -- although some
analysts expect HP would trim jobs -- and operations in more than 80 countries.
HP said the business would be based at EDS' headquarters in Plano, Texas,
and led by EDS chairman and Chief Executive Ronald A. Rittenmeyer.
HP said it expects the deal would produce "significant" cost savings and add
to earnings by next year.
Palo Alto-based HP and EDS had said Monday that they were in "advanced
discussions" about a possible combination without providing additional details.
In Tuesday's announcement, the companies said the deal would have an
enterprise value of $13.9 billion without defining what that included. But based
on 502.6 million EDS shares outstanding as of April 25, the acquisition would be
worth $12.57 billion.
It could be HP's biggest deal in six years.
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