HP-EDS merger draws legal suits

Unhappy with the price, and the lack of space for negotiation on pricing, a U.S. organization and an EDS shareholder are using legal means to try to halt the deal.
Written by Vivian Yeo, Contributor

update An organization in the United States has filed a suit to try to stop the sale of IT services company Electronic Data Systems to Hewlett-Packard.

The Utah-based Intermountain Ironworkers Trust Fund, which filed the suit through legal practitioner Baron and Budd, has alleged that the sale is unfair to EDS shareholders.

Baron and Budd stated on its Web site that the proposed sale agreement prohibits EDS directors from seeking a higher price from alternative bidders and guarantees Hewlett-Packard a payout of US$375 million if the sale does not go through.

The law firm also noted that the deal had not been approved by EDS shareholders.

The Information Week reported last week that an EDS shareholder also filed a suit in Delaware against the merger, seeking to force EDS to "="" class="c-regularLink" rel="noopener nofollow">auction itself off for a higher price.

HP last month confirmed it was buying EDS for US$13.9 billion, days after news of its intention broke.

The deal, according to analyst Ovum, will shake up the global IT services landscape, but at the same time is fraught with the challenges of merging two big companies.

An EDS statement e-mailed to ZDNet Asia said: "EDS believes the transaction with HP is in the best interests of EDS shareholders and intends to defend itself vigorously."

When contacted, a HP Singapore spokesperson said the suits were filed against EDS and as the merger is not yet official, it was not appropriate for HP to comment.

Editorial standards