HP In Talks to Acquire EDS

Reacting to market speculation that HP (Palo Alto, Calif.) is on the verge of acquiring Electronic Data Systems Corporation (EDS; Plano, Texas), the two companies have publicly acknowledged that they are discussing a "possible business combination involving the two companies."

An EDS source conveyed the announcement "in response to market rumors," and both companies emphasized that no assurance could be given that a deal would eventually be consummated. Nevertheless, the announcements confirm rumors that the acquisition process is afoot, and some observers interpret the advanced stage of the talks as something just short of a fait accompli.

"Should HP acquire EDS, it will give them the strong services organization that they've been looking for for a while," comments Matthew Josefowicz, director of insurance practice for New York-based research and advisory firm Novarica. "Incidentally, it will also give [HP] a significant foothold in the life/annuity policy administration space with Solcorp [which EDS acquired in 1998]. Combined with its recent purchase of Exstream [Lexington, KY], HP seems to be on its way to becoming a bigger player in the insurance applications space."

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio