HP Announces European Commission Approval of EDS Acquisition; Agrees to Settle Litigation Relating to Acquisition

26 July 2008

The European Commission has approved without conditions HP's $13.9-billion acquisition of Electronic Data Systems Corporation, which th two companies had announced in May. (See: HP set to acquire EDS for over $12 billion) in a deal that would fetch EDS shareholders $25.00. 

The Commission  said the merger between the two US companies would not hinder competition in the EU market  as EDS and HP did not compete heavily against each other in the information technology markets they do operate in.

On 21 June HP formally sought approval by the European Union regulators for its proposed acquisition of Electronic Data Systems Corporation, for which EU's anti-trust authority, the European Commission was expected to tgive its ruling on the deal by 25 July, but had the option to extend its investigation by 90 working days. (See: Hewlett-Packard seeks EU approval for $13.2 billion EDS acquisition)

The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 relating to the acquisition expired without a request for additional information by the US Department of Justice or the Federal Trade Commission.

The transaction still requires EDS stockholder approval and regulatory clearance from other non-US jurisdictions. EDS stockholders are scheduled to vote on the transaction on 31 July 2008. The transaction also is subject to the satisfaction or waiver of the other closing conditions specified in the definitive agreement.

HP has secured $8 billion in financing commitment with a Deutsche Bank-led group of banks to help finance its EDS acquisition.

An HP-EDS combine would help HP more than double its current revenue amidst slowing PC sales and help it compete with the likes of International Business Machines. HP gets about 15 per cent of its revenue from services, plans to take on IBM in storage devices, software and servers. IBM reported about $54.1 billion in services revenue last year - more than half its sales.