US personal computer giant Hewlett-Packard has reached a deal to buy Electronic Data Systems Corp (EDS) for 13.9 billion dollars, the two companies disclosed Tuesday, dpa reported.
In a joint statement, the two sides said that the boards of HP and EDS had unanimously approved the deal, which prices EDS at 25 dollars per share.
They said they expected to complete the transaction during the second half of 2008 in a move that would then more than double HP's revenues.
The final price tag was somewhat higher than the 12 billion dollars which had been widely reported as the possible takeover cost during the past few days. It represented a 32.5-per-cent premium over the EDS share price prior to the deal's announcement.
The deal is seen as a way for HP to bolster its attempts to compete with IBM in the lucrative race to provide technology consulting and outsourcing for large enterprises.
Soon after disclosing the deal, Palo Alto, California-based HP also reported its preliminary second-quarter business figures, showing revenues of 28.3 billion dollars, up over 10 per cent from 25.5 billion dollars in the same period of 2007.
The transaction, which is expected to close in the second half of this year, has been approved by the boards of both companies.
HP said in a statement Tuesday that it intended to make EDS a separate business group that would remain in Plano, Texas headed by current EDS chairman and chief executive Ronald A Rittenmeyer.
"This reinforces our commitment to help customers manage and transform their technology to achieve better results," Mark V Hurd, the company's chief executive, said of the acquisition.
The EDS deal is HP's largest acquisition since it controversially bought rival computer maker Compaq for 20 billion dollars in 2002. It comes amid a flurry of buyout activity in the technology sector as mature companies attempt to use the cash reserves to buy companies whose stock price is low, to provide them with growth.
Microsoft recently withdrew from a bid to acquire Yahoo in a deal that was seen as an attempt to challenge Google's dominance in online software and advertising.