Giant HP/EDS merger one step closer: a $13.9 billion story

Stephen Withers
Wednesday, 27 August 2008 03:44

IT Industry - Listed Tech

Shareholders in HP and EDS have approved the IT industry's second largest merger and acquisition, with HP set to gobble up global outsourcing giant EDS for a whopping $US13.9 billion. It's a deal that's only exceeded by HP's other major merger of the 21st century: the $US25 billion acquisition of Compaq. What remains for the deal to truly be sealed?

Not content with having the world largest IT acquisition under its belt, HP is doing all it can to ensure it holds the No. 1 and No. 2 spots while transforming itself into what will - once the acquisition process is complete - be one of the world's most formidable tech companies.

After all, EDS is one of the world's leading outsourcers, with an enviable customer list that includes governments as well as major players in the retail, utility, banking and finance, transportation, energy, healthcare, and manufacturing sectors.

HP already has an outsourcing operation, but the EDS acquisition brings a completely new scale to this side of the company's activities.

Integration of the two businesses will see the HP Technology Solutions Group moves its outsourcing services operations plus some consulting and integration activities into the EDS business group.

"While an economic slowdown may force customers to delay some IT investments, it can also open up new outsourcing avenues as customers turn to third parties to operate various aspects of their IT more efficiently," said Ovum research director John Madden.

"Lucky for HP, then, that it will soon have one of the world’s largest outsourcing operations under its roof in a few weeks."

Who's running the show? Find out on page two.