NEW YORK (CNN/Money) -
Consumer products firm Procter & Gamble Co. said Thursday it decided not to sell its back-office operations to Electronic Data Systems Corp. after a myriad of bad news from EDS.
The latest setback for EDS (EDS: down $1.66 to $15.14, Research, Estimates) pushed its shares down nearly 10 percent Thursday. In mid-September the company issued a third-quarter profit warning and then was hit with a "sell" rating from Merrill Lynch and an informal inquiry from the Securities and Exchange Commission.
"We decided with the evolving, changing market conditions, this is what would be best for Procter & Gamble (PG: up $0.41 to $88.27, Research, Estimates) and its employees," P&G spokeswoman Vicky Mayer told CNN/Money.
Mayer added that about 5,700 P&G employees would have been transferred to EDS had the agreement been closed.
P&G, maker of Tide laundry detergent, Ivory soap and other products, will instead look to outsource those operations by the beginning of 2003 to several partners, one of which might still be EDS, Mayer said.
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