http://uk.reuters.com/article/technology-media-telco-SP/idUKN1336842820080513
HP to buy EDS for $12.6 bln in challenge to IBM
NEW
YORK, May 13 – Hewlett-Packard Co has struck a deal to buy Electronic
Data Systems Corp for $12.6 billion, seeking to boost its technology
services business to better compete against market leader IBM The
companies said the deal values EDS at $25.00 per share, a 33 percent
premium to its closing price on Friday, before reports of merger talks
sent the shares soaring on Monday.”They are getting EDS, which I think
is a pretty good company, for a pretty beaten-down stock price,” said
Matt McCall, president of Penn Financial Group.”We’re going to start
seeing more, I believe, of these strategic deals where it’s not private
equity coming, but it’s big companies — such as Microsoft (MSFT.O:
Quote, Profile, Research) trying to go after Yahoo — who have cash on
their books and see beaten-down stock prices,” he said. “And just like
investors,(they) should be taking advantage of that.”
The companies said the deal was worth $13.9 billion including debt.
The
acquisition, expected to close in the second half of 2008, will more
than double HP’s services revenue, which amounted to $16.6 billion in
fiscal 2007. the companies said. Combined, their services businesses
have annual revenue of more than $38 billion and 210,000 employees and
do business in more than 80 countries, the companies said.HP expects
the deal to be boost its adjusted fiscal 2009 earnings and its fiscal
2010 net earnings.HP shares fell 2 percent to $45.89 in pre-market
trading after losing nearly 5 percent on Monday. EDS shares rose 1
percent to $24.39 after gaining nearly 28 percent on Monday.