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HP in $13.9bn challenge to IBM | |
(1 day later) | |
Hewlett-Packard (HP) has struck a deal to buy the information technology provider Electronic Data Systems (EDS) for $13.9bn (£7.2bn). | |
The move will help HP compete with IBM and is HP's biggest acquisition since 2002 when it bought Compaq for $19bn. | The move will help HP compete with IBM and is HP's biggest acquisition since 2002 when it bought Compaq for $19bn. |
HP shares fell on fears the firm was paying over the odds for EDS. | HP shares fell on fears the firm was paying over the odds for EDS. |
EDS is a Texas-based information technology services company and HP is one of its biggest customers. Britain's NHS is also a client. | EDS is a Texas-based information technology services company and HP is one of its biggest customers. Britain's NHS is also a client. |
The deal values EDS at $25 per share, a 33% premium to its Friday closing price, before reports of talks sent the stock soaring on Monday. | The deal values EDS at $25 per share, a 33% premium to its Friday closing price, before reports of talks sent the stock soaring on Monday. |
'A little pricey' | 'A little pricey' |
HP hopes the deal will help it to compete with IBM in the technology services business. | HP hopes the deal will help it to compete with IBM in the technology services business. |
"The combination of HP and EDS will create a leading force in global IT services," said Mark Hurd, HP chairman and chief executive. | "The combination of HP and EDS will create a leading force in global IT services," said Mark Hurd, HP chairman and chief executive. |
Some analysts questioned whether HP was paying too much for a relatively slow-growing company. | Some analysts questioned whether HP was paying too much for a relatively slow-growing company. |
"I would say the deal, in my view, is a little pricey but we'd have to look at the details," said Jeff Embersits, chief investment officer of Shareholder Value Management. | "I would say the deal, in my view, is a little pricey but we'd have to look at the details," said Jeff Embersits, chief investment officer of Shareholder Value Management. |
HP shares fell 5.62% to $44.20 in morning trade in New York. | HP shares fell 5.62% to $44.20 in morning trade in New York. |
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