SAN FRANCISCO - Hewlett-Packard Co. (HP) is negotiating to buy technology services provider Electronic Data Systems Corp. in a deal that could help the world's largest personal computer maker snap up more consulting and data-management contracts.
Palo Alto, Calif.-based HP and Plano, Texas-based Electronic Data Systems (EDS) confirmed the talks Monday, shortly after the Wall Street Journal reported that a deal could be reached as early as today. Citing unnamed people familiar with the matter, the Journal said HP will pay $12 billion to $13 billion -- a price that translates to $24 to $26 per share.
The two companies only would confirm the talks.
EDS shares soared $5.27,or nearly 28 percent, to finish Monday at $24.13. HP shares dropped $2.49, more than 5 percent, to close at $46.64 as investors fretted over the deal's logistics.
HP ended January with nearly $10 billion in cash. With a market value of about $115 billion, HP easily could use its own stock to finance the purchase.
Like many corporate marriages, uniting HP and EDS could trigger cultural clashes that ruin the union, said AMR Research analyst Dana Stiffler. "Palo Alto versus Plano wrangling will destroy any short-medium term benefit unless there's a strong integration road map," she predicted.
If the deal is completed, it would be HP's biggest acquisition since it bought Compaq Computer Corp. for $19 billion in 2002.
HP has been trying to expand its technology consulting and data management business for years, hoping to challenge rival IBM Corp.'s leadership in the lucrative field. In 2000, HP attempted to buy PricewaterhouseCoopers' consulting division. Those discussions unraveled and IBM wound up buying PricewaterhouseCoopers' consulting arm instead.
