HP acquires EDS to boost global IT services

HP and EDS have signed a definitive agreement under which HP will purchase EDS for $13.9 billion.

EDS delivers a broad portfolio of information technology and business process outsourcing services to clients in the manufacturing, financial services, healthcare, communications, energy, transportation, and consumer and retail industries and to governments around the world.

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.

HP anticipates that the transaction will be accretive to fiscal 2009 non-GAAP earnings and accretive to 2010 GAAP earnings.

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

Acquiring EDS advances HP's stated objective of strengthening its services business. The specific service offerings delivered by the combined companies are: IT outsourcing, including data centre services, workplace services, networking services and managed security; business process outsourcing, including health claims, financial processing, CRM and HR outsourcing; applications, including development, modernisation and management; consulting and integration; and technology services.

Meanwhile, HP has launched a highly scalable storage system designed to simplify the management of multiple petabytes of data at an affordable cost, making it ideal for online and digital media businesses.

New business services offered by Web 2.0 and digital media firms - such as photo sharing, streaming media, video-on-demand and social networking - generate massive amounts of file-based data that needs to be stored, managed and retrieved in an instant.

The HP StorageWorks 9100 Extreme Data Storage System offers vast storage capacity and simplified, integrated management and is the first in a series of HP offerings for scale-out environments such as cloud computing, which is an emerging category where services are delivered via the Internet. With an architecture that cost-effectively manages these environments, the ExDS9100 enables customers to deliver new online services or enhance existing offerings to drive new revenue streams.