EDS shareholders want to postpone acquisition by Hewlett-Packard

Posted Jul 22nd 2008 10:43AM by Brian White
Filed under: Deals, Hewlett-Packard (HPQ), Electronic Data Systems (EDS)

Shareholders of EDS Corp. (NYSE: EDS) are starting to fidget in their collective seats now that the a shareholder meeting between the company and suitor Hewlett-Packard Corp. (NYSE: HPQ) is scheduled for July 31st. The delay is being brought on by a contingent of shareholders that believes the price H-P will be paying for EDS is, of course, too low.

The shareholders claim that the $25 per share price is too low in addition to a provision that doesn't allow the EDS board to accept higher offers, should one be brought forth. Dallas-area law firm Baron & Budd said "With increased revenues over the past 12 months and 2008 projections on track, the shareholders are questioning why EDS is accepting what many experts consider to be an undervalued share price." Since EDS is headquartered in Plano, Texas -- just outside Dallas -- perhaps some heavy-handed Texas shareholders don't want to sell out to a west coast firm? Who knows.

EDS continues to believe the acquisition by H-P is still in the best interests of the company. A combined HP-EDS would have more than 200,000 employees with operations in more than 80 countries. The combination would form a large challenge to business services and consulting company IBM Corp. (NYSE: IBM) as H-P tries to conquer yet another giant after taking the PC sales leadership crown from Dell, Inc. (NASDAQ: DELL) in 2007.

Tags: EDS, EDS acquisition, EdsAcquisition, Hewlett-Packard, HPQ, inthenews

Print this

Reader Comments (Page 1 of 1)

7-22-2008 @ 5:31PM

Mike Sanders said...

It appears that someone (else), doesn't believe that EDS shareholders are getting a fair shake, regarding HP's takeover plans. Based on my most conservative estimates and assumptions, EDS is worth over 10% more, than what HP has offered... If I look at it with optimistic eyes, which HP themselves must, that figure rises to over 30%! Either, HP doesn't believe that EDS is going to perform, as most would expect (over the next 18 months), or EDS is in the process of being purchased, at a tremendous bargain! I have to wonder, whether that "bargain" lies hidden inside of shares (options?), which HP has promised to EDS management... I don't know and apparantly, the shareholders of EDS don't know, either. If it is determined, that this deal does not fairly compensate EDS shareholders, I'd like to see it dissolved. EDS would have to pay $375 M to HP, but this would be far bettter, than going ahead and allowing $2 B or more in value, to be transferred into the hands of EDS management, most of which will be staying with HP/EDS. If the EDS shareholders could "transition" to HP (HP shares for EDS shares, fairly valued), just as EDS management is doing, then I'd say fine, because I support the merger, based on the synergy between these two companies. To make EDS management into some kind of quasi-preferred class of shareholders, seems to be wrong. Hopefully, there will be a disclosure, which is understandable to all the shareholders, concerning what the valuations are and where is it all going to? Speaking of disclosures, I do not currently own any EDS, or HPQ.

Michael R. Sanders
Saint Louis, Missouri