HP has confirmed reports that it is close to buying Electronic Data Systems, a deal that would dramatically increase its services business.

A note on the firm's web site yesterday reads, "HP today confirmed that it is engaged in advanced discussions with Electronic Data Systems Corporation regarding a possible business combination involving the two companies."

EDS concurs on its own site, posting this message, "In response to market rumors, Electronic Data Systems Corporation announced that it is in advanced discussions regarding a possible business combination transaction with Hewlett-Packard Company. The company does not intend to comment further unless and until a definitive agreement has been entered into."

Should the deal go through it will be the biggest buy for HP since it acquired Compaq in 2002.