EDS buys Loudcloud Web-hosting business

Electronic Data Systems Corp. will acquire the managed Web-hosting business from Loudcloud Inc. and license the company's information technology automation software in a $63.5 million deal, EDS said June 17.

The acquisition brings EDS of Plano, Texas, 50 new enterprise Web-hosting customers. For the licensing portion of the deal, EDS will pay Loudcloud Inc. of Sunnyvale, Calif., $52 million over three years.

The licensing agreement provides the foundation for immediate widespread automation of service delivery and applications management for EDS' Web hosting business, and eventually throughout EDS' global network of more than 50,000 servers in 14 major data centers and 140 client-owned and regional data centers worldwide.

The acquisition of Loudcloud's managed hosting business is expected to close in September, and is expected to be neutral to EDS' earnings in 2002 and accretive in 2003. On closing, about 140 Loudcloud employees will transition to EDS.

In a separate announcement, Loudcloud said that it will change its name and brand identity to Opsware Inc.

By deploying the Opsware automated solution throughout the company's global data center network, EDS expects to generate more than $100 million in savings over the term of the licensing agreement, said Doug Frederick, executive vice president and sector executive for EDS Operations Solutions.

About the Author

William Welsh is a freelance writer covering IT and defense technology.

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