*NEWS*HP TO BUY EDS FOR $12.6Bln IN CHALLENGE TO IBM !

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*NEWS*HP TO BUY EDS FOR $12.6Bln IN CHALLENGE TO IBM !

 user 2008-05-14 at 3:40:24 pm Views: 91
  • #19661

    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.