HP confirmed today is close to a deal to acquire the
Electronic Data Systems Corporation. The information first emerged as a report in
the Wall Street Journal. The newspapers claimed that HP is willing to pay for EDS
a sum between $12 billion and $13 billion.
HP has issued a statement regarding the report and confirmed
that it is engaged in advanced discussions with Electronic Data Systems
Corporation regarding a possible business combination involving the two
companies.
“HP does not intend to comment further until an agreement is
reached or discussions are terminated,” the company added.
In similar terms, EDS also confirmed the talks. “In response
to market rumors, Electronic Data Systems Corporation announced that it is in
advanced discussions regarding a possible business combination transaction with
Hewlett-Packard Company. The company does not intend to comment further unless
and until a definitive agreement has been entered into,” the company said in a
statement.
“There can be no assurance that a definitive agreement will
be entered into,” EDS added.
Based in Plano,
Texas, Electronic Data Systems is
the world's second-biggest computer-services provider. Its core portfolio
comprises information-technology, applications and business process services,
as well as information-technology transformation services.
EDS’s portfolio includes clients in the manufacturing,
financial services, healthcare, communications, energy, transportation, and
consumer and retail industries and to governments around the world.
In 2006, General Motors awarded EDS a $3.8 billion,
five-year contract to provide systems integration services to the automaker and
last year EDS signed an eight-year, $1 billion contract with KarstadtQuelle AG,
Europe's leading retail and tourism group.
If accomplished, the acquisition would more than double
Hewlett-Packard's annual sales in its services unit to almost $40 billion.
According to the latest financial results announced by HP, in
the first fiscal quarter HP Services (HPS) revenue increased 11% year over year
to $4.4 billion.
Revenue in Outsourcing Services grew 15%, followed by
Consulting and Integration and Technology Services, which grew 13% and 9%,
respectively, over the prior-year period. Operating profit was $489 million, or
11.2% of revenue, up from $406 million, or 10.3% of revenue, in the prior-year
period.
On May 15, HP will announce its financial results for the
second fiscal quarter ended April 30, 2008.
EDS shares soared 25.4%, or $4.79, to $23.65, on the news,
while HP slipped 2.3%, or $1.13, to $48.00.
