Services giant Hewlett-Packard has confirmed it is purchasing Electronic Data Systems (EDS), the oft embattled ITO player with major public sector contracts.

The Wall Street Journal first reported the possibility of a deal on Monday, citing figures of $12bn to $13bn from unnamed sources. HP has today confirmed the deal to an expectant market.

Confirmation of the purcahse sparked a rapid change in shareprices on the NYSE with HP dropping six percent and EDS up 27 percent. EDS issued a statement on the deal after close of trading on Monday.

While the move is being hailed by some commentators and analysts as HP’s bid to take on IBM in the corporate market, others are not convinced – including sourcingfocus.com's Chris Middleton (See Editor's Blog for more).