Hewlett-Packard seals EDS deal

The $13.9 billion acquisition of EDS closes. With its combined power, the bigger company will confront rival IBM.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon

Hewlett-Packard completed on Tuesday its mega-acquisition of computer services giant EDS.

The deal, worth about $13.9 billion when it was first announced in May, is among the largest in the technology industry. It's also the second largest one for HP since its acquisition of Compaq was completed in 2002.

HP executives have said they are buying EDS to expand HP's business beyond traditional computing and printers. HP has been trying to develop its software and services business over the last few years. EDS adds a service component that will help the company compete head-to-head with IBM.

Annual revenue for HP and EDS, combined, in fiscal 2007 was more than $38 billion with 210,000 employees between them operating in more than 80 countries.

But bigger doesn't always mean better. Merging the companies' businesses and cultures won't be easy. And once the combined company manages to get through the integration, some experts say it still has a long, tough road ahead of it as it tries to compete with IBM.

Under the deal, EDS will operate a new business unit, which will be called EDS. It will continue to be led by EDS' current CEO, Ronald Rittenmeyer.

The deal has had the support of HP shareholders from the beginning. It won approval from U.S. antitrust authorities on June 30 and passed muster with European regulators on July 26.