It's Official: HP Is Buying EDS for $13.9 Billion, Cash

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Includes: EDS, HPQ, IBM
by: Eric Savitz

Hewlett-Packard (NYSE:HPQ) this morning made it official: the company has reached a definitive agreement to buy Electronic Data Systems (NASDAQ:EDS) for $25 a share in cash, for a total of $13.9 billion. The deal is expected to close in the second half. The acquisition will more than double HP’s services revenue, and make the company the second-largest player in global IT services sector, trailing only IBM (NYSE:IBM).

EDS will continue to be based in Plano Texas, and current CEO Ronald Rittenmeyer will stay on board and report to HP chief Mark Hurd.

HP says the deal will be accretive to non-GAAP earnings in FY 2009 and to GAAP earnings in 2010.

This morning, HP is down $3, to $43.83. EDS is up 37 cents, or 1.5%, to $24.45; the stock was up $5.27 yesterday after the WSJ broke the news about talks between the two companies.

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