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HP Acquisition of EDS Could Mean Good News for ExcellerateHRO

Industry observers say that if the merger goes through it would provide a swath of new resources and potential clients for ExcellerateHRO, the jointly owned HR outsourcing business shared by EDS and Towers Perrin.

May 12, 2008

Hewlett-Packard has announced that it is acquiring EDS, a move that may mean good news for ExcellerateHRO.

On Tuesday, May 13, HP and EDS announced they had signed an agreement for HP to acquire the Plano,Texas-based technology company for $13.9 billion, or $25 per share.

Industry observers say that if the merger goes through it would provide a swath of new resources and potential clients for ExcellerateHRO, the jointly owned HR outsourcing business shared by EDS and Towers Perrin.

ExcellerateHRO was formed in 2005, but hasn’t amassed many deals in the past three years—causing many to wonder about the fate of the company.

But now that HP is buying EDS, the company could revamp ExcellerateHRO into an HR outsourcing provider that would be competitive with the top players in the market, experts say.

“It would give them a lot of investment in the company at a time when the market is very slow and it will give them access to the HP infrastructure and client base,” says Phil Fersht, an analyst at AMR Research.

The merger would also give HP a partner in the HR outsourcing business, which it has been seeking, analysts say. HP entered the HR BPO business in 2006, when it signed a deal with Nestlé, but has done nothing ever since.

Experts predict that HP will take over Towers Perrin’s ownership of ExcellerateHRO since it doesn’t need the consulting expertise.

It’s unclear what is going to happen to ExcellerateHRO, says Bill Ritz, an EDS spokesman.

“Subsidiaries like ExcellerateHRO are key components of our strategy and sales delivery system,” he says. “It is too early to speculate on any impact this event may have on our subsidiaries.”

—Jessica Marquez