Strategic CIO // IT Strategy
News
7/31/2008
04:40 PM
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EDS Denies Layoff Report, Shareholders Approve HP Deal

The transaction, which valued EDS at $25 per share, is expected to close in the second half of 2008.

A spokesman for IT services provider EDS called a report that the company is planning to lay off up to 20% of its staff in the Americas as it prepares to complete its merger with Hewlett-Packard "completely factually incorrect."

One technology news site on Thursday reported that word of the cuts was spreading internally among managers at the Dallas-based company. The spokesman dismissed the report as "rumor" and said it was false.

Meanwhile, HP's proposed acquisition of the company has cleared two significant milestones.

Earlier this week, EDS said that Europe's antitrust watchdog agency, which has closely scrutinized U.S. tech firms in recent years, has given the deal its OK. On Thursday, EDS said a majority of its shareholders voted in favor of the acquisition.

HP agreed to acquire EDS in May for $13.9 billion. The transaction, which valued EDS at $25 per share, is expected to close in the second half of 2008.

HP has said it plans to create a new business unit that will house EDS's operations and be led by current EDS CEO Ron Rittenmeyer, who will report directly to HP CEO Mark Hurd. The new unit will go to market under the name "EDS -- an HP company."

In one stroke, the merger -- if it goes through as planned -- would create the world's second-largest IT and business services company, next to IBM. The combined services revenue for EDS and HP last year was $38 billion, compared with $54 billion for Big Blue.

HP's EDS unit would house 210,000 employees.

HP has struggled to grow its services business internally. Despite publicly stating its intention to become a leader in the outsourcing market and investing accordingly, the company often found itself in the position of also-ran against competitors like IBM, Accenture, and EDS itself when big deals were handed out.

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