HP buys IT services rival EDS

1 September 2008
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02 September 2008 | Paul Snell

IT services firm HP has completed a $13.9 billion (£7.8 billion) takeover of its rival Electronic Data Systems (EDS).

The deal is the second largest in the IT services sector, behind HP's 2002 acquisition of Compaq. The combined group will employ 210,000 staff operating in 80 countries, and have combined revenues of over $38 billion (£21.3 billion).

Under the deal EDS will now operate as EDS, an HP company, and will be led by current CEO and chairman Ron Rittenmeyer. HP will also move its outsourcing services and parts of its consulting and integration work to EDS as part of the takeover.

"Yesterday's announcement was truly historic for the IT industry, if a bit anti-climactic on how much detail HP was willing or able to disclose about its next moves," said John Madden, analyst at researchers Ovum. "Confirming the timetable of when these key decisions will be taken and implemented would build additional confidence and give the community milestones to monitor."

"Customers overall are in equal parts encouraged, cautious and anxious about an HP-EDS combination. By setting more explicit expectations, and by being a bit more open in communicating the integration plan, HP can provide customers with comfort along with continuity."

Japanese office equipment manufacturer Ricoh has bought its rival printing technology supplier IKON for $1.6 billion (£896 million). Ricoh was originally a supplier of equipment to IKON.

SMsep2008

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