HP and EDS announced that they have signed a definitive agreement under which HP will purchase EDS at a price of $25.00 per share, or an enterprise value of approximately $13.9 billion. The HP and EDS boards of directors have unanimously approved the terms of the transaction.

HP intends to establish a new business group, to be branded EDS – an HP company that will be headquartered at EDS’s existing executive offices in Plano, Texas.

HP anticipates that the transaction will be accretive to fiscal 2009 non-GAAP earnings and accretive to 2010 GAAP earnings.

Acquiring EDS advances HP’s stated objective of strengthening its services business. The specific service offerings delivered by the combined companies are: IT outsourcing, including data centre services, workplace services, networking services and managed security; business process outsourcing, including health claims, financial processing, CRM and HR outsourcing; applications, including development, modernization and management; consulting and integration; and technology services.

Under the terms of the merger agreement, EDS stockholders will receive $25.00 for each share of EDS common stock they hold at the closing of the merger. The acquisition is subject to customary closing conditions, including the receipt of domestic and foreign regulatory approvals and the approval of EDS’s stockholders.