HP EDS Merger

Guide Note

On May 13, 2008, the Electronic Data Systems (EDS) website announced that Hewlett-Packard (HP) and EDS have reached a $13.9 billion agreement to merge.

Hardware and software technology giant HP announced after the stock market closed on May 12, 2008, that they have been in discussions for a possible merger with EDS Corporation, a technology services company that delivers outsourcing services to clients in the government, retail, manufacturing, and numerous other industries.

The deal, which is HP's largest since acquiring Compaq for $20 billion in 2002, is set to close later in 2008 and will give EDS stockholders $25 per share. It will make HP the second-largest company of its kind, a close second to IBM.

Fast Facts

1. Press release was made after the stock market close on May 12, 2008
2. HP and EDS are in competition with each other and IBM
3. Merged, they would have a greater business edge against IBM and would become the second-largest services company in the world
4. HP acquired computer hardware company Compaq in 2002
5. 139,000 additional employees for HP
6. Additional $22.1 billion in revenue

HP is headquartered in Palo Alto , California. The company first started in a garage, focusing on developing electronic test and measurement equipment. HP produced the first hand held scientific calculator and personal computers.

EDS is headquartered in Plano, Texas. They're a business and technology services company and are listed on the Fortune 500 list as one of the largest service companies.

"[Hewlett-Packard] confirmed that it is engaged in advanced discussions with Electronic Data Systems (NYSE: EDS) Corporation regarding a possible business combination involving the two companies."—Hewlett-Packard

"There can be no assurances that an agreement will be reached or that a transaction will be consummated. [HP] does not intend to comment further until an agreement is reached or discussions are terminated."—Hewlett-Packard

"I think HP has been wanting in some sense to be more like IBM for quite a while, It's perfectly consistent with what HP has been trying to do to become more of a solutions provider rather than (just) a product or technology provider. Whether this is going to make sense is going to turn very much on what kind of price HP can get."—Gordon Haff, analyst with Illuminata