HP talks takeover with IT service provider EDS.

The world's largest PC manufacturer, HP, is negotiating a multi-billion dollar takeover of US IT service provider EDS. But according to HP it is not yet a done deal.

According to a report in the Wall Street Journal the purchase price could be up to $13bn (£6.65bn). According to insider information the deal was expected to be made public on Monday, May the 12th, but HP only confirmed that talks were taking place on this date. The takeover would be one of the largest in HP's history. The company purchased competitor Compaq in 2002 for $20bn.

Last year there was speculation that Deutsche Telekom was interested in EDS. EDS (Electronic Data Systems) is one of the world's leading IT service providers. The company's shares shot up 30 per cent to nearly $25 following the report. HP shares on the other hand were under pressure. Trading of both stocks was suspended before the markets closed.

The takeover would help HP to significantly expand other businesses to complement the computer and accessory sectors. The US corporation competes in several areas with sector powerhouse IBM and others. Early this year, for example, Deutsche Post turned over administration of its data centres to HP. Currently services are responsible for some 15 per cent of HP's earnings.

(dpa)

(trk)