EDS buys Loudcloud business

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

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.

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