Monday, May 12, 2008

HP and EDS in "advanced discussions"

HP and EDS confirmed that they are in "advanced discussions" that could result in HP acquiring EDS to create a more formidable competitor to IBM. Such a deal could be worth between $12 billion and $13 billion. The news sent EDS shares surging $5.27, or almost 28%, before a halt closed trading at $24.13. The rumored value of the deal would imply a price between $24 and $26 a share for EDS, a level the stock has not traded at since last August. HP's stock fell $2.48, or 5%, to $46.65 [before also being halted, something the story doesn't mention].

Source: MarketWatch

This could be interesting for the HR outsourcing industry. EDS owns 85% of ExcellerateHRO; I doubt this is a business HP wants anything to do with that particular business. I'd wager they will put their interest in ExcellerateHRO on the block as soon after buying EDS as their contractual obligations allow.

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