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Wed, May 14, 2008 - Page 10 News List

HP and EDS in 'advance discussions' for a tie-up

AFP , SAN FRANCISCO

Hewlett-Packard Co (HP) said on Monday it was in "advanced discussions" with Electronic Data Systems Corporation (EDS) regarding a possible tie-up involving the two companies.

World-leading computer maker HP and Texas-based business services outsourcing titan EDS each issued statements confirming tie-up talks, but warned they could not assure a deal would be reached.

“It is a very bold move, but I wouldn’t say it’s a super surprising move given what HP’s core strengths are,” IDC executive vice president of worldwide research Crawford Del Prete said.

“They complement each other very well. There is a lot of synergy that can go on,” he said.

HP’s massive data centers and experience in business computing hardware would mesh well with the expertise EDS has in outsourcing technical services for companies, he said.

EDS says at its Web site that it founded the information technology outsourcing industry in 1962 and is now a multibillion dollar company handling services for banks, hospitals, shops, energy producers and other firms.

A merger with EDS would undoubtedly increase HP’s power to wrest market share from rival IBM in the “classic outsourcing space,” Del Prete said.

The price of EDS stock leapt more than 25 percent, as reports spread that HP was willing to pay premium for the deal.

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