HP buys EDS for $13.9 billion

HP has confirmed that it has bought services company EDS, in a $13.9 billion deal.

In a statement released today, HP announced that it will pay $25 per share for the Texas-based services company, with the aim of doubling HP's services revenue, which amounted to $16.6 billion in FY07.

EDS remain as a separate operating company, under the EDS brand, under the control of current EDS chairman, president and chief executive officer Ronald A Rittenmeyer.

Mark Hurd, chairman, CEO and president of HP said: "The combination of HP and EDS will create a leading force in global IT services. 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."

According to an HP statement, the deal will give the combined company's strength in services for data centres, networking, security, workplace services and business process outsourcing.

Rittenmeyer said: "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. In addition, our Agility Alliance will be significantly strengthened."

The deal, which is subject to regulatory approvals, is due to close by the second half of 2008.