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Hewlett-Packard to buy EDS for $12.6 billion in bid to challenge IBM in tech services(Associated Press WorldStream Via Acquire Media NewsEdge) SAN FRANCISCO_Hewlett-Packard Co. has agreed to buy Electronic Data Systems Corp. for about $12.6 billion (?8.17 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 (?10.76 billion) in 2007. EDS had $22.13 billion (?14.34 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 (?9.01 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 (?8.15 billion). It could be HP's biggest deal in six years. Copyright ? 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. |