EDS acquires Comm Bank stake in EDS Australia

Stan Beer
Thursday, 21 April 2005 21:30

IT Industry - Development

EDS has reacquired the Commonwealth Bank of Australia's (CBA) 35 per cent stake in EDS Australia (EDSA) reportedly for more than $170 million.

CBA took the stake in the local branch of the global IT services giant in 1997 as part of a 10 year IT outsourcing valued at $3.7 billion. Under the agreement, EDSA acquired CBA IT infrastructure and 1500 CBA IT staff were offered positions at the outsourcer.

CBA took the stake as a virtual insurance policy against paying too much for the outsourcing services supplied by EDSA.

The banking group explained its decision to sell back its stake in the outsourcer saying that, as the agreement is now in its eighth year, it is no longer necessary. CBA said it had reached a commercial agreement with EDS, which will see the bank recover the value of its investment.

In announcing the change, Steve Schuckenbrock, EDSA chairman, said, "When the Commonwealth Bank and EDS announced the 10-year contract in 1997, an important part of the deal was for the bank to take an equity position with EDSA. However, a jointly owned company is not required for EDS and the Commonwealth Bank to have a strong, constructive business relationship moving forward."

Schuckenbrock said EDS would continue to deliver services to CBA in accordance with its contract.