HP will acquire EDS for $13.9bn (£7.1bn) after the boards of both companies reached a unanimous agreement.

HP plans to form a new business group branded EDS - an HP company, and its headquarters will be at EDS's executive offices in Plano, Texas.

"First and foremost, this is a great transaction for our stockholders, providing tremendous value in the form of a significant premium to our stock price," said EDS chairman, president and chief executive Ronald Rittenmeyer.

"It's also beneficial to our customers, as the combination of our two global companies and the collective skills of our employees will drive innovation and enhance value for them in a wide range of industries."

"The combination of HP and EDS will create a leading force in global IT services," Mark Hurd, chairman and chief executive of HP. said Hurd.

"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."