Hewlett-Packard, popularly known as HP, declared that the deal is fixed to acquire IT outsourcer EDS for $13.9 billion, which means $25.00 per share.

The Board of Directors of both the companies has approved the deal, which is expected to seal in the second half of this year. HP stated that the deal will help it achieve more than double of its services revenue.

With this move, HP will be able to expand its IT services business and jump to the second spot just behind IBM whose Global Technology Service division has been a strong profit generator for the company since a long time.

With the worldwide market for IT services standing at $748 billion last year, IBM ruled the market with around $54 billion revenue, followed by EDS with $22 billion. Accenture and Fujitsu acquired the third and the fourth spot respectively, with HP standing at the fifth place with $17 billion revenue, as per the recent figures from Gartner.

The acquisition will help HP’s services business grow and allow it to provide a wider range of services in order to attract large business customers. EDS is known in providing infrastructure management services as well as custom application services that allows it to assist companies in designing, integrating and managing applications.

HP has made expansion attempts earlier as well, but did not go forward with the deals. For example, in the year 2000 HP dropped the idea of acquiring PricewaterhouseCoopers Consulting, which was ultimately bought by IBM a couple of years later for $3.5 billion.

IBM generates more than half of its revenue from services annually, while HP’s services business made only 16% of its total revenue of $104.3 billion in 2007.

It seems that by acquiring EDS, HP plans to strengthen its power and become a serious threat to IBM regarding services business.