Two Ways To Play: Will Hewlett-Packard Spark M&A War?
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Terms were not disclosed but H-P may make an announcement as early as tomorrow on the systems and technology services company. Friday, EDS had a market capitalization of $9.5 billion and its shares closed at $18.86.
Analysts believe the deal could put H-P in a better position against rival International Business Machines (IBM) which provides similar services. Some believe the transaction could even spark an M&A war in the tech sector. In 2002, H-P paid $20 billion for Compaq.
Shares of both companies were halted prior to today's close.
See Macke's Movers: Hewlett-Packard Eyes Electronic Data Systems
From the Bull Pen: Bulls might look to other candidates in the tech sector for upside plays. Professor Sean Udall mentioned one to consider: Starent Networks (STAR). Another option could even be Affiliated Computer Services (ACS).
From the Bear Cave: Although it could be too late to short (depending on your risk profile), Professor Macke raised his suspicions at the timing of this rumor as H-P is set to report next week. Bears attempting the short side might want to limit the downside risks by using puts.
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