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HP to Buy EDS in $13B Deal

HP is closing in on a deal to purchase consulting giant EDS for $13.9 billion.

A report in The Wall Street Journal yesterday revealed that HP is close to clinching the deal, prompting EDS to issue a statement on its company Website: In response to market rumors, Electronic Data Systems Corporation announced that it is in advanced discussions regarding a possible business combination transaction with Hewlett-Packard Company.”

This morning, HP announced a definitive agreement to buy EDS at $25 per share, or a total of $13.9 billion. The boards of both companies have approved the transaction, which is expected to close in the second half of this year.

The deal will be HP’s biggest acquisition since its $20 billion purchase of Compaq six years ago. It could also help boost the vendor’s storage business, which has been identified as a top priority by CEO Mark Hurd.

At least one analyst thinks an EDS acquisition could be the foot-in-the-door HP needs when it comes to bolstering its services and storage businesses.

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