HP set to acquire EDS for over $12 billion

13 May 2008

IT giant Hewlett-Packard Co is likely to acquire technology outsourcing company Electronic Data Systems Corporation (EDS) for $12-13 billion.

''We are engaged in advanced discussions with Electronic Data Systems Corporation regarding a possible business combination involving the two companies,'' Hewlett-Packard said in a website release.

''There can be no assurances that an agreement will be reached or that a transaction will be consummated,'' HP added.

The acquisition, if successful, would be HP's biggest since its $19-billion acquisition of Compaq in 2002.  It would also make the company a close second to IBM in technology services.

A bigger HP would also be able to compete better against IBM in servicing large clients while at the same time keeping costs in line.

EDS, which competes with both HP and IBM, also competes with Accenture Ltd and Computer Sciences Corp in the United States, as well as India's Infosys Technologies Ltd, Tata Consultancy Services Ltd and Cognizant Technology Solutions Corporation.