HP and EDS have confirmed that they have signed a definitive agreement under which HP will purchase EDS at a price of US$25.00 per share, or an enterprise value of approximately US$13.9 billion.
The terms of the transaction have been unanimously approved by the HP and EDS boards of directors.
The notice came just a day after HP had confirmed the companies were in talks regarding this negotiation.
The transaction is expected to close in the second half of calendar year 2008 and to more than double HP's services revenue, which amounted to US$16.6 billion in fiscal 2007. The companies' collective services businesses, as of the end of each company's 2007 fiscal year, had annual revenues of more than US$38 billion and 210,000 employees, doing business in more than 80 countries.
HP intends to establish a new business group, to be branded EDS - an HP company, which will be headquartered at EDS's existing executive offices in Plano, Texas. HP plans that EDS will continue to be led after the deal closes by EDS Chairman, President and Chief Executive Officer Ronald A. Rittenmeyer, who will join HP's executive council and report to Mark Hurd, HP's chairman and chief executive officer.
"The combination of HP and EDS will create a leading force in global IT services," said Hurd. "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."
HP says acquiring EDS advances its stated objective of strengthening the services business. The specific service offerings delivered by the combined companies are: IT outsourcing, including data center services, workplace services, networking services and managed security; business process outsourcing, including health claims, financial processing, CRM and HR outsourcing; applications, including development, modernization and management; consulting and integration; and technology services. The combination will provide extensive experience in offering solutions to customers in the areas of government, healthcare, manufacturing, financial services, energy, transportation, communications, and consumer industries and retail.