HP and EDS have announced that they have reached an agreement on a purchase and buyout price. HP will buy the firm for $13.9bn, or $25 per share.

The transaction is likely to close in the latter half of this year, and will, HP said, double its services revenue, which according to its own figures is worth some $17bn a year.

A new business group, called EDS - an HP company, will be established at EDS' current offices, and will continue to be led by EDS Chairman, President and Chief Executive Officer Ronald A. Rittenmeyer.

"The combination of HP and EDS will create a leading force in global IT services," said Mark Hurd, HP's chairman and chief executive officer. " Together, we will be a stronger business partner, delivering customers the broadest, most competitive portfolio of products and services in the industry. This reinforces our commitment to help customers manage and transform their technology to achieve better results."