HP challenges IBM for service supremacy with $13.9 billion EDS buyout

Stan Beer
Tuesday, 13 May 2008 18:18

IT Industry - Strategy

“Ultimately, whether IBM, Accenture, CSC and Capgemini need fear the outcome of this potential deal would rest on the success or otherwise of what would undoubtedly be a very ambitious corporate integration project. On paper an HP-EDS combination looks workable. But in practice it could prove anything but.”

Naturally, HP was somehwat more bullish and upbeat in its announcement of the deal to the market.

“The combination of HP and EDS will create a leading force in global IT services,” said Mark Hurd, HP’s chairman and chief executive officer. ”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.”

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 Hurd. However, it will be interesting to see how such a senior figure as Rittenmeyer takes to a 2IC role.

Rittenmeyer said, “First and foremost, this is a great transaction for our stockholders, providing tremendous value in the form of a significant premium to our stock price. It’s also beneficial to our customers, as the combination of our two global companies and the collective skills of our employees will drive innovation and enhance value for them in a wide range of industries. In addition, our Agility Alliance will be significantly strengthened.”