HP Completes $13.9 Billion Acquisition of EDS

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HP today (August 26, 2008) announced that it has completed its acquisition of Electronic Data Systems Corporation (EDS) at enterprise value of approximately US$13.9 billion, creating a leading force in technology services.

It also revealed that EDS’ top-level management structure would remain largely unchanged.HP had already made it clear that EDS president and CEO Ron Rittenmeyer, would continue in a leadership role. On Tuesday, it confirmed that Rittenmeyer’s direct reports would include key executives from EDS continuing in their roles as vice presidents overseeing various regions of the world as well as functions such as global sales, transformation, outsourcing and marketing.

The lack of a top-level management shuffle or purge did not surprise one industry observer.

The acquisition is, by value, the largest in the IT services sector and the second largest in the technology industry, following HP’s acquisition of Compaq, which closed in 2002. The companies’ collective services businesses, as of the end of each company’s 2007 fiscal year, had annual revenues of more than $38 billion and 210,000 employees, operating in more than 80 countries.

“No real surprises here so far,” said Forrester Research analyst Paul Roehrig, via e-mail. “It’s very much in line with the original strategy to fold much of the legacy HP services capability into the EDS management framework.”

EDS will handle outsourcing services previously provided by HP’s Technology Solutions Group, which will focus instead on designing, installing and maintaining systems for customers, HP said.

HP plans to reveal more about its plans for EDS on Sept. 15, when CEO Mark Hurd appears at a meeting Webcast for securities analysts.

The massive deal which sets up a pitched battle between HP and IBM for dominance in the services arena created a combined services business with nearly $40 billion in annual revenue and more than 200,000 employees as of the end of fiscal 2007, according to HP.

New EDS leadership team
Rittenmeyer announced his leadership team for the new business group, representing a mixture of existing EDS direct reports, as well as new appointments from within EDS and HP. His direct reports are:

  • Michael Coomer, 55, senior vice president, Asia Pacific & Japan, who held a similar role at EDS.
  • Joe Eazor, 46, senior vice president, Transformation. He was previously responsible at EDS for corporate strategy and business development.
  • Bobby Grisham, 54, senior vice president, Global Sales, who held a similar role at EDS.
  • Jeff Kelly, 52, senior vice president, Americas, who held a similar role at EDS.
  • Mike Koehler, 41, senior vice president, Infrastructure Technology Outsourcing (ITO) & Business Process Outsourcing (BPO), who held a similar role at EDS.
  • Andy Mattes, 47, senior vice president, Applications Services. He was previously senior vice president, HP Outsourcing Services.
  • Maureen McCaffrey, 45, vice president, Worldwide Marketing, who held a similar role at EDS.
  • Dennis Stolkey, 60, senior vice president, U.S. Public Sector, who held a similar role at EDS.
  • Bill Thomas, 48, senior vice president, Europe, Middle East & Africa, who held a similar role at EDS.

In addition, functional support will be provided by the following individuals, who will report into global functions at HP, consistent with the company’s organizational model. They are:

  • Craig Flower, 46, senior vice president of IT, reporting to Randy Mott, executive vice president and chief information officer at HP. Flower was previously HP’s senior vice president for eBusiness, customer and sales operations.
  • Tom Haubenstricker, 46, vice president, Finance, reporting to Cathie Lesjak, executive vice president and chief financial officer at HP. Haubenstricker was previously vice president and chief financial officer for EDS’ EMEA region.
  • Deborah Kerr, 36, vice president and chief technology officer, reporting to Shane Robison, executive vice president and chief strategy and technology officer at HP. Kerr was previously HP’s vice president and chief technology officer for services.
  • Mike Paolucci, 48, vice president, Human Resources, reporting to Marcela Perez de Alonso, executive vice president of Human Resources at HP. Paolucci was previously EDS’ vice president of Global Compensation and Benefits/HR Business Development.
  • Sylvia Steinheiser, 43, vice president, Legal, reporting to Mike Holston, executive vice president, general counsel and secretary at HP. Steinheiser was previously HP’s vice president, Legal, for the Americas.

Source: HP News Release | The New York Times

– Sakin