HP to buy EDS for expanding technology consulting services

Competition

US computer maker Hewlett-Packard announced Tuesday it has struck a deal to buy technology services provider Electronic Data Systems for $13.9 billion, which could help it compete in the fast-growing consulting services market with industry leader IBM.

The acquisition, which has been approved by the boards of both companies, is the biggest since the Silicon Valley high-tech giant bought Compaq for nearly $20 billion in 2002. The merger with EDS will more than double HP’s business providing services to corporate and government clients, making HP a “leading force in the global IT industry,” said HP CEO Mark Hurd.

IBM currently dominates that business, with an estimated $48.3 billion in revenues from business services. Hurd said the combined revenues of HP and EDS from business services were “more than $38 billion” last year. Industry analysts said that the EDS deal would enable HP to grow in a market that hasn’t been its principal strength, but in which it has been trying to expand in recent years to grab more market shares as companies and government agencies increasingly reach out for technology services. Under the deal, the Texas-based EDS will become a division of HP, and the combined companies will have a total of 210,000 employees doing business in 80 countries, company officials said. (people.com.cn)

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