The Commonwealth Bank of Australia has sold its 35 percent stake in Electronic Data Systems' (EDS) Australian operation back to its outsourcing partner.
EDS issued a brief statement saying the timing of its reacquisition of the equity holding from CBA was "a measure of the maturity of the ... relationship" between the two companies.
The CBA signed an AU$5 billion, 10-year technology services sourcing agreement with EDS in 1997. It issued a statement to the Australian Stock Exchange this morning saying "as the 10-year agreement is now in its eighth year and as the bank no longer considers the investment in [EDS Australia] as core to its business, it has been agreed with EDS that this jointly-owned vehicle is no longer necessary".
However, EDS adopted a more bullish tone. "...A jointly-owned company is not required for EDS and the Commonwealth Bank to have a strong, constructive business relationship moving forward," EDS Australia chairman Steve Schuckenbrock said.
An EDS spokesperson told ZDNet Australia the transaction was a commercial arrangement "which involves a structured share buyback of AU$173 million". The CBA said the deal would result in the bank recovering the carrying value of its investment in EDS Australia. "As a consequence, the sale will not materially impact the 2004/05 result for the Bank".
The bank's three directors on the EDS Australia board were due to resign once the acquisition arrangements were completed.
The move is in line with previous moves by the CBA to exit its equity holdings in outsourcing partners. In November last year, Telecom New Zealand bought back the CBA's five percent equity stake in its Australian subsidiary, TCNZ Australia (TCNZA) as a five-year, AU$500 million telecommunications outsourcing deal between the two drew to a conclusion.