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Posted: Friday, May 16, 2008, 3:39PM

HP set to acquire EDS in battle for outsourcing dominance

Computer giant Hewlett-Packard is planning to buy technology outsourcing giant Electronic Data Systems (EDS), as it looks to rise to the challenge posed by IBM.

The announcement received a mixed welcome on Wall Street but, if completed, the deal would propel HP to second place in the global technology services industry, just behind IBM.

The ambitious acquisition would be the company’s largest since it snapped up Compaq for $19 billion in 2002.

"The EDS acquisition was unexpected, but strategically and financially compelling, in our view," Citi analyst Richard Gardner told Reuters.

"The deal should create cross-selling opportunities and boost confidence in EDS as a service provider."

HP said it expected to close the deal in the second half of 2008.


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