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EDS shareholders move to block HP acquisition

Electronic Data Systems (EDS) shareholders will take to a Texas district court Thursday to seek an order to postpone a July 31 shareholders meeting in which they are meant to vote on the Hewlett-Packard (HP) acquisition.

Shareholders say the current acquisition agreement stalls the price of EDS shares at $25 and prohibits EDS from seeking higher bids from other companies. They say EDS is worth more, considering it has seen increased revenue in the past year and its 2008 revenue projections are on target.

“Why is EDS accepting what many experts consider to be an undervalued share price,” asked Randall Baron, an attorney with Baron & Budd, one of the law firms representing the shareholders.

This week, Barron’s reported that shares of Accenture — a consulting firm somewhat similar to EDS — are trading for 20 percent lower than they are actually worth. Since the credit crunch started last year, Accenture has seen incredible growth, much of which is attributed to its work in helping companies streamline IT — work that EDS does also.

Shareholders also say they will be stuck in a financial bind if the deal goes through.

“Currently, this deal provides for tens of millions of dollars worth of benefits to EDS management, most of whom will continue to work for HP after the merger,” said Bruce Steckler another attorney representing the shareholders. “But, the average shareholders aren’t even given the option to convert EDS stock to HP stock, so they’re all going to be hit with unexpected tax bills on these undervalued earnings.”

Thursday shareholders will specifically ask that the vote be held off “pending full disclosure and correction of deficiencies in the agreement.”

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