Personal computer and printer maker Hewlett-Packard has struck a deal to buy US computer services company Electronic Data Systems. The price is nine billion euros in cash including debt. It is buying the shares for a third more than their price before HP’s interest was revealed.
Some analysts considered the price to be high, and pointed to the potential difficulties in integrating two such large companies. But Hewlett-Packard’s Chief Executive Mark Hurd says he isn’t worried and is looking to synergies and cost savings.
IBM remains the world’s largest IT services provider with turnover last year of 37 billion euros. EDS and Hewlett Packard together would have had annual revenue of 26 billion euros, taking it past the current No 2 – Accenture of the US. CapGemini of France is the fourth largest.
The deal should help Hewlett-Packard better compete with the industry’s heavyweight IBM. Most of IBM’s sales and profit come from software and services.
EDS, a pioneer of information technology outsourcing, was founded by Ross Perot, best know as a US presidential candidate.