|
EDS, MCI seal venture
|
 |
February 11, 1999: 7:32 a.m. ET
As part of outsourcing agreement, EDS to buy MCI unit for $1.65B
|
NEW YORK(CNNfn) - In one of the largest telecommunications joint ventures ever, EDS and MCI WorldCom announced a multibillion-dollar deal Thursday in which each company will give the other significant segments of their businesses for a period of 10 years.
As part of the deal, which is estimated to be worth up to $17 billion, EDS will purchase MCI Systemhouse for $1.65 billion and hire more than 12,000 MCI WorldCom employees.
EDS, a global information services company with revenue of $16.9 billion, and MCI WorldCom, a worldwide telecommunications firm with revenue of $30 billion, have divided their agreement into several parts.
First, in what the companies say will be the telecommunication industry's largest information technology outsourcing agreement to date, MCI WorldCom (WCOM) will outsource major portions of its IT services to EDS (EDS), with revenue to EDS expected to range between $5 to$7 billion over the 10 years of the contract.
EDS, for its part, will outsource most of its global network to MCI WorldCom, which is expected to generate revenues for MCI of between $6 to $8.5 billion.
EDS has also agreed to pay $1.65 billion in cash to acquire MCI Systemhouse, an IT services provider with $1.7 billion in revenue. The purchase will make EDS one the largest IT services providers in Canada.
The companies also said they would develop networking solutions for business and government entities to use the global capabilities of both EDS and MCI WorldCom.
"Aligning with MCI WorldCom and its global telecommunications capabilities will enhance EDS' ability to serve our customers as they move into the digital world of electronic business," said Dick Brown, EDS chairman and CEO. "This relationship assures that both EDS and those we serve are positioned to capitalize on the cresting wave of global data and voice network services."
"This agreement is a classic win-win," said John Sidgmore, MCI WorldCom vice chairman. "It allows both companies to grow their core businesses while creating synergies as each expands its global offerings. EDS offers MCI WorldCom proven IT and integration expertise, which will be key to our ability to maintain our technology leadership position as we continue to aggressively deploy facilities and expand globally."
Shares in EDS fell ½ Wednesday to 45-7/8. MCI WorldCom also dipped ½ Wednesday, closing at 76-1/4. 
|
|
|
|
|
|
EDS
MCI WorldCom
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
