(Bloomberg News) -- Hewlett-Packard Co. was nearing a deal to acquire Computer Sciences Corp. last month until the talks broke down, people with knowledge of the matter said.
The purchase of Computer Sciences, which has a market value of about $9.6 billion compared with Hewlett-Packard’s $61 billion, would’ve been the biggest for HP since 2011. The effort shows Chief Executive Officer Meg Whitman is serious about making big acquisitions to reshape the company’s enterprise business, as it prepares to split into two entities.
Hewlett-Packard, which worked on the potential Computer Sciences purchase for several months, doesn’t intend to revisit talks with the company, one of the people said. Computer Sciences fell 1.7 percent to $67.71 in New York trading Thursday. Hewlett-Packard dropped 1.9 percent to $33.30.
Computer Sciences has a large services, consulting and technology infrastructure business with deep connections to governments in the U.S. and abroad. Whitman said this week she sees the recent wave of mergers and acquisitions in the tech sector as a “tectonic plate” shift in the industry.
“We talk to a lot of people, a lot of the time, but I can’t comment on this one specifically,” she said Wednesday when asked about Computer Sciences. Rich Adamonis, a spokesman for Computer Sciences, declined to comment.
Both HP and Computer Sciences have announced plans to split into two companies. In HP’s case, one of the businesses would contain its enterprise activities, while the other would sell printers and PCs. Whitman will be CEO of the enterprise business, and chairman of the PC maker.
Computer Sciences plans to separate its high-growth government business from its commercial one.
Computer Sciences has made multiple attempts to sell itself over the years, and other interested parties could emerge -- in particular for the commercial business, the people said. Canada’s CGI Group Inc. has had informal conversations with the company about acquiring that business, according to one of the people. The parties remain far apart on price however, this person said.
A representative for CGI declined to comment.
Hewlett-Packard has run into trouble with large acquisitions in the past. In the decade before Whitman took over in 2011, the company struck almost $66 billion of deals, including of the U.K.’s Autonomy Corp. for $10.3 billion. Just one year after that deal closed, Hewlett-Packard said it would write down about 85 percent of the purchase price after discovering accounting improprieties that inflated Autonomy’s finances.
Still, the company is “back in the M&A game,” Whitman told Bloomberg TV this week.
Hewlett-Packard acquired networking company Aruba Networks Inc. in May for $2.5 billion and purchased security startup Voltage Security Inc. in April as well as cloud startup Eucalyptus Systems Inc. late last year.
Despite the potential for growth through M&A and research and development, HP is dogged by challenges to its businesses ranging from the rise of cloud computing to the arrival of new software companies. Those have led to year-over-year sales declines in every one of its business divisions, according to the company’s most recent earnings report.
It also has faced hurdles in its current services business, which it acquired through the purchase of Electronic Data Systems in 2008. That unit hasn’t met HP’s own expectations, and the company is contemplating additional restructuring there to create savings of around $2 billion.
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