HP-EDS Acquisition: Market and Customer Impacts

On Tuesday, May 13th, HP confirmed that it is planning to acquire EDS for $13.9B in a deal that is expected to close in the second half of this year. EDS is currently the second largest IT outsourcing services provider and HP the fifth – together they will put themselves in a stronger tier 1 position with IBM, with some 210,000 employees in over 80 countries and combined services revenue of over $39B (IBM will still be larger, with over $54B in services revenue). The new IT services group will be named “EDS – an HP Company,” and will be based at EDS’ current corporate headquarters in Plano, Texas. It has been reported that the merged services organization will be run by EDS’ current Chief Executive Officer, Ron Rittenmeyer, who will report directly to HP’s CEO, Mark Hurd, although we believe this structure may only be temporary.

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