With the necessary regulatory approvals in place and a thumbs-up from shareholders, HP today announced it has completed its acquisition of EDS, a $22 billion-plus global technology services, outsourcing and consulting leader that pioneered the IT outsourcing industry.
"EDS will combine powerfully within HP’s overall strategy and business mix," said Mark Hurd, chairman and CEO of HP. "Together, HP and EDS deliver one of the most complete and competitive portfolios in the industry."
"Our combination makes too much sense not to make it a reality," said Ron Rittenmeyer, chairman, president and CEO of EDS. "At EDS, we gain access to the scale and resources of an industry giant, providing outstanding new opportunities for our clients, while at the same time delivering excellent value to our shareholders. HP gains from our best-in-class capabilities, end-to-end global delivery network and track record of providing great service."
The deal, priced at $25 a share for a total value of $13.9 billion, is the second largest ever in the technology industry behind HP's 2002 acquisition of Compaq. The two transactions bookend a growth strategy that has taken HP well beyond $100 billion in annual revenues to more than $125 billion in collective 2007 revenue, with the addition of EDS.
Phase One of HP's strategy has been about building the world's best hardware business. Phase Two has focused on developing a layer of leading software applications, with a particular emphasis on management automation, to optimize the performance of HP's hardware and differentiate it in the marketplace. Phase Three has addressed the services side with a goal of bringing the business into the forefront of global providers.
Along the way, HP has successfully acquired 26 companies over the past three and a half years, developing substantial experience in integrating new businesses. Following news on May 13 of HP's intention to acquire EDS, more than three months of intensive integration planning has taken place, putting the company in a strong position to better serve our clients quickly.
“Clients look to HP to help them manage and transform their technology environments to deliver better business outcomes,” said Ann Livermore, executive vice president, Technology Solutions Group (TSG), HP. “Expanding our service capabilities and capacity makes our value proposition even stronger.”
She emphasized that both HP and EDS have been built on a commitment to providing clients with unparalleled quality, service and practical innovation. Additionally, there is very little overlap among their major customers.
EDS expands HP's scale in vertical industries such as government and healthcare and enhances the global reach of HP's outsourcing service delivery capabilities, particularly in Europe and the Americas. The combination ensures a more competitive marketplace in the technology industry by providing customers with a globally scaled choice for managing their most critical business technology needs.
Under Rittenmeyer, the new EDS business group will maintain its Plano, Texas, headquarters and lead the company's outsourcing and applications services businesses. TSG will be focused on servers, storage, software and technical services, as well as certain consulting and integration services. Customers and employees will benefit from more tightly focused businesses that have clear missions and strategies that will help deliver stronger growth for shareholders and an unparalleled platform on which to build for the future.
In the words of Mark Hurd, "Together, we have an opportunity to create the greatest technology company on the planet."